Starlink is Poised to Move into Yemen

If you thought Ukraine was tricky, try Yemen on for size.

Starlink, the satellite-powered internet service offered by SpaceX, was originally pitched to the public as a way to get high-speed internet to remote parts of the globe. With the outbreak of the war in Ukraine, however, its value as a military service became abundantly clear. Although CEO Elon Musk has expressed some equivocacy about Starlink’s military uses, Bloomberg reported Wednesday that it’s set to receive official approval to enter Yemen, where a civil war has been raging since 2014. So like it or not, Musk appears to be coming to terms with his reluctant role as a military contractor. 

War and Broadband

Exactly how much money Starlink makes and from whom is not clear, since parent SpaceX is a private company that isn’t required to report financials. Musk tweeted last November that the service had achieved “breakeven cash flow,” but a Bloomberg report from last month cast some doubt on that accomplishment, with sources saying the division has mountains of undisclosed costs. What’s known for certain is that Starlink, like SpaceX, has some pretty meaty contracts with the US government. The Department of Defense last October awarded Starlink a $70 million contract, and the Pentagon signed a contract last June with Starlink to continue providing internet coverage to Ukraine.

Now it appears Starlink is poised to enter Yemen as well, and the company’s motivation might include both more revenue — and keeping control over its product:

• A Bloomberg investigation in March revealed a thriving international black market for Starlink terminals has spread as far as Yemen and Sudan. A Wall Street Journal investigation published a few weeks later reported similar findings, adding that some terminals had been smuggled into Iran and that Russian soldiers had been able to use Starlink.
• Starlink is only authorized to operate in countries where it has obtained licenses and it started cracking down on the illicit network last month. A Yemeni official told Bloomberg the terms of its license in Yemen are being hammered out, but it could still take a month or so to finalize.

A Star is Born: While Starlink executes the delicate dance of a military contractor, a new rival may have arrived. Satellite internet firm SES said Tuesday it’s buying fellow satellite player Intelsat for $3.1 billion. It’s part of a major consolidation trend in the sector but it didn’t inspire much investor confidence, as the deal involves taking on a chunk of debt. Defying gravity? Easy. Defying interest rates… less easy.