Starlink entry triggers more expert calls for level playing field in ICT sector
Own Correspondent
Zimbabwe risks worsening the unemployment situation in the country and destroying its local ICT sector if the authorities do not create a level playing field by imposing the same taxes on Starlink that it levies on local ICT companies, industry experts have warned.
Starlink, the satellite internet service provider owned by Elon Musk’s SpaceX company, recently entered the Zimbabwe broadband market amid much fanfare from some sections of the market.
But the anticipation has quickly been dampened by mounting concerns about impact of unfair competition with local ICT players, due to potential disparities in tax obligations.
Dr Dennis Magaya, CEO and founder of Rubiem Technologies, warned that the satellite-based service could unfairly undermine local companies, if it is not subject to the same tax and regulatory obligations obtaining for local players.
“A risk is that Zimbabwe may destroy the local telecoms industry and export jobs to the USA,” Dr Magaya said.
“While a few other jobs enabled by affordable internet may emerge, we risk losing an entire sector. If satellite-to-mobile phone technology becomes widespread, traditional telecoms as we know it could become obsolete, and our children may not have a telecom industry to work in,” he said.
Zimbabwe’s telecommunications sector, led by local players such as Econet Wireless, NetOne, and TelOne, is a critical driver of employment.
Telecom companies directly employ thousands of professionals, including engineers, technicians, IT specialists, sales agents, accountants, marketing and customer support staff. The companies indirectly employ hundreds of thousands of product distributors, vendors, dealers and brand ambassadors who sustain hundreds of thousands of families across the country.
Industry experts say local telcos and ISPs have sunk substantial investment running into billions of dollars in infrastructure, innovation and service delivery, contributing to the country’s economic development.
But, without a level playing field, local operators may be forced to downsize, resulting in significant job losses.
It is estimated that 85-90% of Zimbabweans are engaged in informal economic activities at the personal, household, or enterprise level.
The 2022 Labour Force Survey published by the Zimbabwe National Statistics Agency (Zimstat) pointed out that 3.3 million people are employed locally, while over 2.8 million Zimbabweans derive their living from the informal sector compared to 495 000 who are in formal employment.
Analysts indicated that local operators bear significant costs associated with licensing, spectrum fees, and infrastructure maintenance. While many of these statutory obligations and regulatory compliance requirements may be justifiable, they however make it difficult for local companies to compete with global giants such as Starlink, which do not carry a similar financial burden.
“Local internet service providers and telcos cannot compete with Starlink on pricing alone,” said Vimbai Mutambu, an ICT expert.
“Global companies like Starlink don’t have the same overheads as local operators. Without taxes and regulations, local firms will likely be forced to reduce their workforce or cut back on services,” she said, adding that
decreased revenues for local telcos will result in layoffs and a reduction in the government’s tax collection base from the ICT sector.
Zimbabwe’s telecommunications industry generates an estimated US$850 million annually. However, according to industry reports, over 95% of the components required to run telco networks are imported, adding to the operational costs borne by local companies. Any decline in revenue due to Starlink’s market presence could further strain the local economy and result in significant job losses.
Botswana-based ICT expert Tendai Dube urged the adaptation of a balanced approach in regulating Starlink’s operations in Zimbabwe.
“While Starlink offers the potential to expand internet access to underserved and remote areas, the government must ensure that local operators are not unfairly disadvantaged,” she said.
“By introducing a fair taxation model for Starlink, the government can protect jobs, support local businesses, and encourage investment in Zimbabwe’s digital infrastructure.”
Dube warned that if the government fails to regulate and tax Starlink appropriately, Zimbabwe could face the collapse of its telecommunications industry and see a decline in infrastructure investment.
This, she said, would be a setback for Zimbabwe’s full digital economy aspirations.