BY SAM ALFAN.
The entrance of American billionaire Elon Musk’s into the country as internet service provider has unsettled Kenya’s largest telco Safaricom, which has for years dominated the sector.
Starlink satellite will certainly disrupt the internet landscape as the Tesla billionaire bets on lowering internet costs in a segment dominated by Safaricom, Jamii Telecommunications Ltd and Zuku.
Safaricom has already felt the presence of Starlink and the telco first expressed its dissatisfaction by writing to the industry over claims that its entrance into the Kenyan market poses a threat to mobile network quality.
And in what appears that it was ready for an all-out war, Safaricom announced early this week that it would be charging home fibre wifi customers Sh8,000 for three months instead of usual Sh9,000 for three months.
The cheapest Safaricom home fibre package is Sh2999 per months.
Though the two companies operate in different modes, the entrance of American billionaire Elon musk’s company means the giant internet providers have to fight for their space, a fight that will eventually benefit the consumer.
Both Starlink and Vodafone represent critical players in the future of global telecommunications, albeit from different approaches.
Starlink’s vertically integrated, space-based internet solution is poised to revolutionize rural internet access, while Vodafone’s vast infrastructure and push into 5G make it a dominant player in urban and semi-urban areas.
The possibility of future collaborations between satellite internet providers like Starlink and traditional telecommunications companies like Vodafone could lead to innovative solutions for bridging the global digital divide.
In terms of corporate evolution, Starlink’s eventual IPO may set it apart from SpaceX, offering it greater financial flexibility, while Vodafone’s decentralized subsidiary model positions it well to adapt to regional demands and partnerships, including potential synergies with satellite-based services.
Lobby group Kituo Cha Sheria has already moved to court seeking to stop Safaricom and industry regulator from blocking Starlink’s entrance into the Kenyan market.
It is not clear whether the lobby is aware of what it was getting itself into especially, in an industry when billions of money is made by big boys in the industry with huge investment made in the industry for strong internet infrastructure.
The lobby group said in the petition to the High Court that the telco and Communication Authority of Kenya (CA) should allow the growth of satellite internet services and claims by Safaricom that direct entry into the market poses a threat to mobile network quality, are unfounded.
This petition was prompted by the letter sent to Communication Authority of Kenya by Telco giant safaricom to block starlink. The lobby group said Safaricom engaged in predatory practices in a letter on July 5, 2024 to the regulator, opposing the direct entry of Starlink into the country.
Vodafone’s significant presence in Africa, the Middle East, and parts of Asia presents opportunities for collaboration with Starlink in providing broadband access to underserved regions.
Vodafone could leverage its regulatory know-how and customer base in these markets, while Starlink could offer a scalable solution for providing internet in areas where fiber or terrestrial mobile networks are not feasible.
For example, Vodafone could partner with Starlink in regions like Sub-Saharan Africa, where terrestrial internet infrastructure is lacking, to create a joint satellite-terrestrial internet solution. This would combine Vodafone’s market knowledge and customer relations with Starlink’s advanced satellite technology.
One of the most promising areas of collaboration could be in 5G backhaul, where Starlink’s satellite network could complement Vodafone’s 5G networks. Deploying 5G requires extensive ground-based infrastructure, but in remote areas, Starlink’s satellites could provide a viable alternative for connecting these networks to the broader internet, reducing reliance on costly fiber deployments.
This could lead to a hybrid network model where Vodafone provides the consumer-facing 5G services, and Starlink offers the backend infrastructure for connecting these services to the internet in hard-to-reach areas.
Vodafone operates in over 25 countries, each with distinct subsidiaries that are highly localized in terms of regulation, marketing, and operational strategy. Vodafone’s model is characterized by both joint ventures and subsidiary ownership, which provide flexibility in adapting to regional markets.
One of the unique aspects of Vodafone’s structure is its significant presence in emerging markets through partnerships and mergers. For example, in India, Vodafone merged with Idea Cellular, creating Vodafone Idea, now one of the largest telecom operators in the country. This demonstrates Vodafone’s strategy of acquiring stakes in high-growth markets to expand its footprint.
While Starlink and Vodafone occupy distinct spaces in the telecommunications industry—Starlink with its satellite internet focus and Vodafone with its terrestrial telecom infrastructure—there are significant opportunities for collaboration or synergies in the near future.
While Starlink is currently a division of SpaceX, future shifts in corporate structure are likely if it becomes publicly traded. Elon Musk has hinted at a potential spin-off of Starlink in the form of an Initial Public Offering (IPO), separating Starlink’s financials from SpaceX’s broader space exploration ambitions. This would allow SpaceX to raise capital while maintaining its core focus on its space transport objectives.
Such a spin-off would allow Starlink to follow a more traditional corporate governance model, likely introducing a board of directors and distinct leadership teams focused exclusively on the satellite internet sector. However, the timeline for this remains speculative.
Starlink, being fully integrated within SpaceX, reflects SpaceX’s ownership structure. However, examining Starlink’s potential future as a publicly traded entity presents insights into its evolving shareholder dynamics.
Elon Musk’s majority ownership in SpaceX, while diluted in equity terms by venture capital funding, maintains a high concentration of voting rights. This could carry over into a potential Starlink IPO, ensuring Musk maintains strategic control over the satellite network’s direction even if Starlink were to become a separate publicly traded company.
The role of early investors in SpaceX, such as Google (Alphabet Inc.) and Fidelity, may be significant in Starlink’s future, particularly given their interest in the convergence of satellite technology and global internet access. Should an IPO take place, these investors might seek to increase their stake or influence within Starlink.
Starlink, despite its massive capital expenditure requirements for satellite deployment, has a significant advantage due to SpaceX’s cost-effective launch capabilities. By leveraging reusable rocket technology, the per-launch costs for Starlink satellites are significantly lower than for competitors, which could make the company more attractive to investors if it goes public.
Unlike traditional telecommunications companies or other satellite ventures, Starlink’s financial future is tied to the cost curve of space access—a relationship that is highly dependent on SpaceX’s success in reducing launch costs further.
