WEBVTT - Why Starlink Is Dividing The South African Government

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Elon Musk's Starlink service is growing across Africa, with more

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<v Speaker 2>than two dozen countries connected to the satellite internet service.

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<v Speaker 3>We look at LEO satellites and constellations as an integral

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<v Speaker 3>part of the future. We're not fighting them, we're not resisting,

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<v Speaker 3>We're actually embracing them, and we're thinking about the partnership

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<v Speaker 3>models that makes more sense in specific markets.

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<v Speaker 2>But ownership rules in South Africa have held Starlink back

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<v Speaker 2>from the country and the firm has been lobbying hard

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<v Speaker 2>to find a way in Africa's most industrialized economy.

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<v Speaker 3>First of all, you should be questioning why is there

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<v Speaker 3>why they're racist laws in South Africa. That's the first problem.

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<v Speaker 2>That's what you should be attacking.

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<v Speaker 1>Now.

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<v Speaker 3>I'm in the subsid situation where I was born in

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<v Speaker 3>South Africa but can get a license to operate in

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<v Speaker 3>Starlink because I'm not black.

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<v Speaker 2>Does that seem right to you? On today's podcast, we'll

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<v Speaker 2>look at Starlink's progress across the continent and why their

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<v Speaker 2>attempts to enter South Africa are proving to be quite controversial.

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<v Speaker 2>I'm Jennifer's Abasaga and This is the Next Africa Podcast,

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<v Speaker 2>bringing you one story each week from the continent, driving

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<v Speaker 2>the future of global growth with the context only Bloomberg

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<v Speaker 2>can provide. And joining me this week is Bloomberg's senior

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<v Speaker 2>reporter Loney princelou and also our reporter Rivaldo Yankees. Thank

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<v Speaker 2>you both for being with us this week. You both

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<v Speaker 2>have done extensive reporting on this subject, so I'm really

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<v Speaker 2>grateful that you both came on the podcast. Loney, let's

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<v Speaker 2>just start with a look at Starlink and what it

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<v Speaker 2>is exactly and what are the services that the company

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<v Speaker 2>has been offering across the continent over the past few months.

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<v Speaker 1>So as Starlin, as we know, is a low as

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<v Speaker 1>orbit satellites sort of constellation, and at the moment, I

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<v Speaker 1>have something like fourteen thousand satellites orbiting around the which

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<v Speaker 1>makes it one of the easiest ways to connect, especially

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<v Speaker 1>when it comes to rural areas and the cheapest ways.

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<v Speaker 1>So many African countries have actually taken up the starting service.

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<v Speaker 1>I think they are in twenty five African countries at

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<v Speaker 1>the moment, including Nigeria and Kenya. Some of the holdups

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<v Speaker 1>that we've seen in terms of African countries taking up.

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<v Speaker 1>The service is of course licensing and many countries, not

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<v Speaker 1>just in Africa but in other places requiring local ownership

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<v Speaker 1>and starting as a rule do not actually see local ownership.

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<v Speaker 1>So that's been one of the sort of sticking points

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<v Speaker 1>in many of these markets.

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<v Speaker 2>And of course there's been quite a bit of talk

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<v Speaker 2>about the importance of getting the continent connected right. The

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<v Speaker 2>mobile penetration is high, but we still need to get

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<v Speaker 2>connectivity up. When we look at starlink and compare the

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<v Speaker 2>services that it offers in terms of connection, is it

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<v Speaker 2>offering a better proposition or countries compared to some of

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<v Speaker 2>the other players in the industry.

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<v Speaker 1>So you made an important point. There is coverage often,

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<v Speaker 1>but the actual connections to homes in rural areas are

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<v Speaker 1>quite low. Even in a country like South Africa, where

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<v Speaker 1>the connectivity is high across the board more than eighty percent,

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<v Speaker 1>when it comes to connecting rural houses, that's lower than

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<v Speaker 1>one point seven percent in rural South Africa, So you

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<v Speaker 1>can see there's quite a big discrepancy. And the easiest

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<v Speaker 1>and the cheapest way to connect those houses is through

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<v Speaker 1>satellite technology. And what Mask has done very well is

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<v Speaker 1>the way he's packaged his technology, it's very mobile, it's

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<v Speaker 1>very easy to use, it's small kits, so that then

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<v Speaker 1>becomes a very user friendly option for these areas. It's

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<v Speaker 1>also often it's much cheaper than trying to connect through

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<v Speaker 1>a fiber connection when it comes to telecoms providers like

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<v Speaker 1>a Voticon or mpty in so it does, in many

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<v Speaker 1>instances provide a better way to connect things like emergency

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<v Speaker 1>services and rural areas.

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<v Speaker 2>How much cheaper approximately are we talking, Lenie?

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<v Speaker 1>So it really depends from country to country and what

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<v Speaker 1>your options are, and it's often it's not that it's

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<v Speaker 1>that much cheaper, but it is that it's more convenient

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<v Speaker 1>and that it's the actual only connection that can get

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<v Speaker 1>to that certain spot. So I think in places like

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<v Speaker 1>Zimbabwe it did turn out to be a lot cheaper,

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<v Speaker 1>about fifty percent cheaper. I think the important part is

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<v Speaker 1>that it's often the most usable option when it comes

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<v Speaker 1>to certain areas. Well.

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<v Speaker 2>Let'stick into one of those countries that doesn't currently have

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<v Speaker 2>starlink operating, and that is of course South Africa. As

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<v Speaker 2>was mentioned Reval though, let's bring you in here. But

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<v Speaker 2>because you've been doing some reporting on this, what is

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<v Speaker 2>the opposition, right now to Starlink opening up here in

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<v Speaker 2>the country.

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<v Speaker 4>So the big issue here is regulation South Africa is

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<v Speaker 4>what's called Blaque empalment loose, which basically required telecom companies

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<v Speaker 4>to have at least thirty percent black local ownership. The

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<v Speaker 4>idea is to fix the economic inequalities created during a party.

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<v Speaker 4>Now for Elin Musks basics installing, that's a problem because

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<v Speaker 4>they don't want to give up ownership to enter the market.

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<v Speaker 4>That's really the main barrier right now.

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<v Speaker 2>And of course it's hard to separate Elon Musk from

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<v Speaker 2>the debate. He was born in South Africa but left

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<v Speaker 2>for North America when he was seventeen. Recently he's spread

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<v Speaker 2>a conspiracy theory about a quote genocide against white people

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<v Speaker 2>in the country, and US President Donald Trump has promoted

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<v Speaker 2>the message Rivaldoloni stick with me. When we come back,

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<v Speaker 2>we'll talk more about Starling's plans for South Africa and

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<v Speaker 2>why they're lobbying in the country. Is proving to be

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<v Speaker 2>quite controversial. We'll be right back. Welcome back. Today we

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<v Speaker 2>are looking at Starlink's growth in Africa and why South

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<v Speaker 2>Africa is proving to be a sticking point for the company.

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<v Speaker 2>Loney princelu and Rivaldo Yankeys are both with me still. Rivaldo,

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<v Speaker 2>before the break, we were just talking about some of

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<v Speaker 2>the sticking points for Starlink and Elon Musk around ownership.

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<v Speaker 2>What has the government had to say about this? Because

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<v Speaker 2>Black empowerment laws, as you were just mentioning, they were

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<v Speaker 2>introduced after the end of apartheid and compelled companies and industries,

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<v Speaker 2>including banking, mining and telecommunications to sell stakes to black

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<v Speaker 2>people who were systemically excluded from the economy during white

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<v Speaker 2>minority rule. I imagine the government has had quite a

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<v Speaker 2>lot of commentary around this in particular.

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<v Speaker 4>So this is where things get messy. There's basically a

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<v Speaker 4>political split inside government. I mean sooth Africa. We have

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<v Speaker 4>a government of national Unity. So Minister Soli Malachi of

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<v Speaker 4>the DA as a change the changing these rules so

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<v Speaker 4>companies like Stalling can invest in things like infrastructure or

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<v Speaker 4>communities instead of giving up ownership, which is basically the equity,

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<v Speaker 4>equivalent and alternative to be laws. But the government isn't

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<v Speaker 4>united on this. Members of the AGENC, like Deputy Minister

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<v Speaker 4>only Kungo Beele, they're pushing back. I'm saying that you

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<v Speaker 4>can't just change the law like that. So it's basically

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<v Speaker 4>a split inside or government of National Unity.

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<v Speaker 2>What about Starlink itself, I imagine you spoke to them for

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<v Speaker 2>your own reporting.

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<v Speaker 4>So Stalling hasn't officially commented in interviews, but earlier this

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<v Speaker 4>year they published the blog post responding to the debate.

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<v Speaker 4>So the blog post is basically debunking myths and facts

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<v Speaker 4>about potentially operating in South Africa. So they pushed back

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<v Speaker 4>on some of the criticism and so that they committed

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<v Speaker 4>to South Africa. They're also promised to invest about five

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<v Speaker 4>hundred million rare into things like connecting the rural schools,

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<v Speaker 4>what I speed internet. So the message is from Stalling,

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<v Speaker 4>we can still contribute to the country, just not through local.

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<v Speaker 2>Ownership, Lennie. Clearly, as Rivaldo was just pointing out there,

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<v Speaker 2>this has attracted quite a lot of attention within the government,

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<v Speaker 2>even within I think that the tech industry, which you

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<v Speaker 2>cover quite extensively, and even citizens. Right, when you talk

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<v Speaker 2>about connectivity in South Africa, how important would Starlink operating

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<v Speaker 2>here be for the company. Let's just start with that.

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<v Speaker 1>South Africa is of course the biggest economy in Africa,

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<v Speaker 1>in the biggest chem of things. I can't think that

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<v Speaker 1>it would really hit stalling margins, if I can put

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<v Speaker 1>it that way. So it seems emotive. It seems like

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<v Speaker 1>it's very important for him to operate here. And while

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<v Speaker 1>it is the biggest economy in Africa and it must

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<v Speaker 1>be important to operate here, he has many other countries

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<v Speaker 1>around the world to operate and so yeah, one has

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<v Speaker 1>to ask what is motivating him so strongly to comment

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<v Speaker 1>almost weekly on the situation in the country and on

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<v Speaker 1>the sort of black empowerment laws and things like that.

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<v Speaker 2>Exactly. That's sort of what it's seeming like and lonely.

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<v Speaker 2>Maybe just before we wrap up, you mentioned Starlink is

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<v Speaker 2>expanding globally, even on the continent. What are you watching

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<v Speaker 2>for next when it comes to some of these expansion

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<v Speaker 2>plans for Starlink.

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<v Speaker 1>I'll speak specifically on Africa. They've recently opened in Central

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<v Speaker 1>Republic of Africa, so that wasn't much I think, and

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<v Speaker 1>then they've tried to open in Namibia, which they sort

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<v Speaker 1>of we're blocked by the same thing, local ownership. Namibia

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<v Speaker 1>is asking fifty one percent local ownership and so there

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<v Speaker 1>was sent away. They're going to appeal that decision. As

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<v Speaker 1>I understand, but for them, really they're in twenty five

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<v Speaker 1>Africa countries, they want to be in all fifty four.

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<v Speaker 1>This is the sort of messaging we've been getting all

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<v Speaker 1>along for Starling is really also a numbers game, so

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<v Speaker 1>you really want to launch in every country where where

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<v Speaker 1>you can. There's different concerns around US, not only local

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<v Speaker 1>ownership laws, there's also things around security, like information security

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<v Speaker 1>that people are thinking about with a US company operating here,

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<v Speaker 1>what information can they actually access, what information can they use? So,

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<v Speaker 1>as you can understand, the debate is huge, and as

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<v Speaker 1>technology evolves quite fast and different players want to enter,

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<v Speaker 1>this just becomes more and more of a conundrum when

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<v Speaker 1>it comes to regulations and what to allow and not

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<v Speaker 1>to allow in your country, especially if it is that's

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<v Speaker 1>important to have people connected because as you get connected,

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<v Speaker 1>you're also able to access the international economy much easier.

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<v Speaker 1>There's different debates around US.

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<v Speaker 2>Do you think it potentially poses a risk for some

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<v Speaker 2>of the telecom providers already on the continent.

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<v Speaker 1>So the big guys on the continent is empty En, Etail, Vitacom.

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<v Speaker 1>All of these have individually actually partnered with Starling in

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<v Speaker 1>some sort of way where they Startink does owned licenses,

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<v Speaker 1>they sell the hardware of styling, for instance, in their shops.

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<v Speaker 1>It's a combination where the providers will want to work

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<v Speaker 1>with styling Starlink. Of course in many instances want to

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<v Speaker 1>go at it by itself, so it does pose a risk,

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<v Speaker 1>but I think it's sort of there's a lot of

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<v Speaker 1>space for the continent to get connected in different ways.

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<v Speaker 1>So it's a five G or a four G, or

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<v Speaker 1>it's fiber and then satellite. You have to work in

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<v Speaker 1>satellite into the equation. So I think there's room for

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<v Speaker 1>all of these players if you want to connect a

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<v Speaker 1>very big continent as Voss and messes for everyone, I would.

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<v Speaker 2>Say Bloni and Rivaldo thank you again so much for

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<v Speaker 2>joining us this week, and be sure to read Rivaldo's

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<v Speaker 2>report on Bloomberg platforms right now. Will put a link

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<v Speaker 2>to that in the show notes. Here's some of the

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<v Speaker 2>other stories we've been following across the region this week.

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<v Speaker 2>Madagascar's anti corruption authorities are probing major irregularities in the

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<v Speaker 2>management of public resources estimated at three thousand, eight hundred

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<v Speaker 2>and eleven billion ariari about nine hundred and nineteen million dollars.

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<v Speaker 2>That's according to the presidency and Zimbabwe's dollar denominated stock

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<v Speaker 2>exchange has eclipsed the country's one hundred and thirty two

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<v Speaker 2>year old main course, propelled by the biggest listing in

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<v Speaker 2>the nation's history. You can follow these stories across Bloomberg,

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<v Speaker 2>including the Next African Newsletter. We'll put a link to

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<v Speaker 2>that in the show notes. This program was produced by

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<v Speaker 2>Adrian Bradley and tiwa Adebayo. Don't forget to follow and

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<v Speaker 2>review the show wherever you usually get your podcasts. I'm

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<v Speaker 2>Jennifer's Abisanja. Thanks as always for listening.