Starlink’s Entry into Lesotho: A Strategic Gamble with Geopolitical and Economic Risks

The Lesotho Communications Authority’s (LCA) decision to grant Musk’s Starlink a 10-year operating license marks a pivotal moment for the tiny mountain kingdom’s digital future. Yet, this milestone is not without controversy, as it pits Lesotho’s economic dependence on the U.S. against regional tensions and domestic concerns over foreign ownership. The license, finalized after a year-long regulatory overhaul, represents both an opportunity to bridge the digital divide and a complex negotiation of sovereignty, trade pressures, and geopolitical alignment.

The Regulatory Journey and Domestic Opposition

Starlink’s application, first submitted in April 2024, required Lesotho to modernize its outdated licensing framework for low-Earth orbit satellites. After two rounds of public consultations and regulatory revisions, the LCA approved the license on April 14, 2025. However, local stakeholders—including telecom giant Vodacom Lesotho (80% foreign-owned but with a 20% local stake) and civil society group Section Two—voiced sharp criticism over Starlink’s 100% foreign ownership. Critics argue that the model undermines local economic participation, contrasting it with established operators like Vodacom and Econet Telecom Lesotho (30% government-owned).

Section Two’s Kananelo Boloetse warned that the license risks “economic exclusion” and could strain ties with South Africa, which rejected Starlink’s application for similar reasons. Lesotho’s reliance on South Africa for 70% of its exports ($351 million in 2023, largely textiles and diamonds) amplifies these concerns, as Pretoria may view Starlink’s presence as a backdoor for circumventing its regulatory restrictions.

Geopolitical Tensions and U.S. Trade Pressures

The timing of the license approval coincides with Lesotho’s tense negotiations with the U.S. over tariffs. President Trump’s administration imposed a 50% tariff on Lesotho’s exports under the African Growth and Opportunity Act (AGOA) in February 2025, threatening 12,000 jobs in AGOA-dependent garment factories. While the tariff was temporarily reduced to 10%, Prime Minister Samuel Matekane framed Starlink’s license as a strategic move to appease the U.S. and attract investment.

However, critics dismiss this linkage, noting that tariffs and satellite licenses are unrelated issues. The U.S. State Department’s revelation that Lesotho aimed to finalize the license by April 15—a deadline tied to tariff negotiations—fuels skepticism about the decision’s independence.

Investment Implications: Risks and Opportunities

For investors, Starlink’s entry offers a mixed picture. On the one hand, the license aligns with SpaceX’s global expansion strategy: Starlink now operates in over 20 African countries, and Lesotho’s rugged terrain and limited infrastructure make it an ideal market for satellite broadband. The LCA’s modernized regulations could also attract other tech players, fostering competition and lowering costs.

Yet, the risks are significant. Lesotho’s economy remains fragile, with 80% of its GDP tied to exports. A prolonged tariff dispute with the U.S. or diplomatic fallout with South Africa could destabilize the country’s financial footing. Meanwhile, Starlink’s lack of local ownership may deter domestic investment in complementary sectors like data centers or tech startups.

Conclusion: A Balancing Act with High Stakes

Lesotho’s decision to license Starlink reflects a precarious balancing act between technological progress and economic sovereignty. While the license could accelerate digital inclusion and attract U.S. investment, its terms—particularly foreign ownership—risk alienating regional partners and undermining local economic participation.

Investors must weigh Starlink’s potential to drive connectivity against the geopolitical and regulatory risks. Lesotho’s reliance on AGOA ($240 million in annual exports) and South African trade ($351 million in 2023) leaves little room for miscalculation. The LCA’s final terms, expected to address service standards and compliance, will be critical in determining whether this gamble pays off—or becomes a cautionary tale of haste over strategy.

As emerging markets grapple with tech giants’ global ambitions, Lesotho’s experience underscores a broader truth: in an interconnected world, even small economies cannot afford to ignore the fine print.