Starlink founder and owner Elon Musk during a ceremony in Berlin, Germany, in a file photo. Patrick Pleul (AP)
The richest man in the world is strengthening his business in Mexico. Starlink, the satellite internet unit of SpaceX owned by tycoon Elon Musk, has won two contracts to provide satellite internet in the Federal Electricity Commission (CFE) in its Telecommunications and Internet for All (CFE-TEIT) branch Won under a contract that runs until December 2026.
According to the ruling published by the state-owned company on Monday, Mexico’s Starlink Satellite Systems won the competition against two other companies because they “offered the best conditions in terms of price.” According to the document, the agreement is for a minimum of 887.5 million pesos and a maximum of up to 1,775 million pesos (just over $101 million).
The agreement between the Mexican state-owned company and the Internet provider provides for the provision of a low-orbit satellite backhaul connectivity service and related equipment to launch a telecommunications infrastructure under a CFE public Internet and telephone access program in rural areas of Mexico, where there is currently none gives connectivity.
Although this is the South African tycoon’s second business venture in the country, the challenge of operating in the telecommunications sector is enormous. Although more than 25 million Mexicans do not have an internet connection, the provision of internet via satellite represents a small sector. According to data from the Federal Telecommunications Agency (IFT) as of March 2023 (most recent data), there are 26.3 million fixed broadband internet connections in the country (BAF).
Fiber optic technology is currently the most used technology, accounting for 44% of connections, and Telmex, owned by Mexican millionaire Carlos Slim, has the largest penetration in the country. Only 0.6% of Internet connections are made via satellite, the sector in which the South African businessman wants to compete with CFE TEIT, meaning just over 162,000 connections are made via this medium.
The price of satellite internet packages is one of the opportunities for Starlink to compete with companies such as Hughes, StarGo and Viasat, which have been present in the country for more than a decade. Commercial satellite internet offerings in the country start at 999 pesos per month (approximately $58), depending on the operator, and most of these plans include a certain number of gigabytes (GB) for downloading content.
However, Musk’s entry into the telecommunications scene is seen as good news. Jorge Bravo, president of the Mexican Association for the Right to Information (Amedi), said in an interview that Starlink’s entry into Latin America and Mexico has raised the importance of the satellite industry and made it more visible. “The biggest advantage it offers to governments, in this case CFE Telecom, is the connection speed due to its constellation of low orbit satellites,” he comments.
The figure of the tycoon is undoubtedly also an incentive for the development of this business. “It is striking that Starlink does not have a physical presence in the countries, but receives concessions and orders,” explains Bravo. “There is no doubt that satellites are a complementary technology to terrestrial 5G networks and are essential for connectivity in rural, remote areas or in emergency situations such as Hurricane Otis,” adds the UNAM scientist.
Although the satellite connectivity industry is still in its infancy in the country and can be developed by Elon Musk, the president of Amedi emphasizes that the Mexican state must pay attention to the development of this model. “Connectivity policy must take into account the convergence of technologies and Starlink is exploiting it, but the satellite industry must not be tempted by governments subsidizing its business model,” he emphasizes.
Musk sees Mexico as fertile territory for his business. In March, Tesla announced that Nuevo León would be the headquarters of its new electric car mega-factory with a $5 billion investment. However, months later, the company still has not started work or broken ground. In addition, it has required the Government of Nuevo León to provide a series of energy and water support infrastructure to make this facility operational.
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