Following official confirmation that the Argentine government will give Starlink the contract to provide internet connectivity to 6,000 rural schools nationwide for at least three years, the close relationship between President Javier Milei and tech billionaire Elon Musk continues to grow. The agreement between the National Communications Agency and Starlink, which encompasses a joint investment of approximately US$22 million, was disclosed in late July. Starlink is set to deliver 6,000 satellite connectivity kits, encompassing two years of priority service, with an estimated expenditure of US$10 million. The government will allocate the remaining US$12 million to finance installation, technical support, network monitoring, and the third year of service. Upon the conclusion of the third year, the provinces and municipalities participating in the initiative will assume responsibility for financing the expenses associated with Starlink’s corporate service. The agreement, however, swiftly attracted scrutiny. Critics have highlighted the lack of a public bidding process and the insufficient public information surrounding Starlink’s proposal. Aside from the announcement that the education ministry will disclose which schools will participate in the program, the government has provided no further details.
The exclusion of other companies that could have participated in a potential bidding process is another point under scrutiny. This includes the state-owned company ARSAT, which has been defunded by the current government and possesses a satellite capable of providing the services that Milei requested from Elon Musk’s company. Given the absence of a government bidding process and a public offer from Starlink, the precise cost of the project remains uncertain. Telecommunications market analyst Enrique Carrier observed in a recent report that the costs for the initial three years “are not so linear,” as there is a “discount” in the first two years that is recouped in the third. His estimates indicate that the cost in the initial two years would be US$30 per month, increasing to US$166 in the third month. This would imply that the mean over the three-year period would equate to a monthly expenditure per school of US$74. Carrier suggests that this could function as a “benchmark” for provinces and municipalities after the conclusion of the third year. However, there is no official confirmation that this will occur. The issue of the actual cost is no minor matter, given Milei’s close ties to Musk and the fact that internet service providers operating in Argentina informed that the US$166 service cost is significantly higher than what is available in the market.
The method of awarding the contract has emerged as a significant area of dispute. The standard procedure for the Argentine government when it requires services from a private entity involves initiating a public bidding process. Companies that express interest are required to submit their technical and financial proposals, which are accessible to the public. An evaluation committee assesses each proposal, and the relevant authority grants the project to the most appropriate bid, determined by a blend of price, quality, track record, and compliance. Carrier recognised that it is reasonable to expect that the direct commission to Starlink could provoke “controversy.” He contended that it would have been more “thorough” to issue a call for bids. For Martín Becerra, a Conicet researcher and communications expert, the awarding of the contract by ENACOM to “a company the president never tires of praising” has drawn attention. He also observed that the Argentine government was not the entity that proposed the deal. On July 15, Starlink Argentina submitted a letter of intent outlining the proposal. Only nine days later, the agreement received approval. “For anyone familiar with the pace of the Argentine government, nine days is a nanosecond — it’s very unusual,” Becerra told, adding that there was neither a technical evaluation nor a consultation regarding which 6,000 schools would be included in the plan. He also noted that state funding will be sourced from the Universal Service Fund, which is managed by ENACOM.
This fund is financed by 1% of the contributions made by all telecommunications companies, including Musk’s company, although it has been operating for a relatively short time since 2024. “A significant portion of that funding has been provided, in some cases, by Starlink’s competitors. Now, they are upset because Starlink is accessing funding they contributed to — and doing so through a handpicked process,” he added. Telecommunications companies in Argentina have voiced their discontent, highlighting that the government intends to partially subsidise Starlink’s operations via the FSU fund, all while enacting policies that hinder their competitive ability. For Gonzalo Berra, the Milei administration “lacks a predictable policy regarding the satellite services sector in Argentina.” He added that Argentine companies providing satellite internet service are being “crushed” by the opening of the market to foreign companies and the “lag” in the exchange rate. “Our costs are in pesos, and our prices are in dollars,” Berra told. This indicates that should the Argentine peso strengthen relative to other currencies, including the U.S. dollar, it results in lower costs for Argentines when acquiring goods and services from overseas. However, it also becomes increasingly challenging for Argentine companies to export goods and services.
Despite this situation, Berra stated that Starlink’s prices starting in the third year “are higher than what any of us are charging,” arguing that the service could cost US$100. “The sector is under a lot of pressure, and the signal the government is sending is that it’s stepping in to finance the very company that’s putting us out of business,” he added. Pablo Mosiul — one of Starlink’s main distributors in Argentina — adopted a more conciliatory stance, stating that Musk’s company provides a “very high-quality” solution. He noted that moving forward, there is “a good opportunity” to complement these initiatives “with the operational capabilities that already exist locally.” Mosiul did not provide a specific figure when enquired about the cost of offering a service akin to Starlink’s, but indicated that Orbith is “very cost-efficient” and would be “very competitive” regarding pricing. A question that swiftly emerged following the announcement of Starlink’s collaboration with the Argentine government was the rationale behind not awarding the contract to the state-owned telecommunications entity ARSAT, particularly considering that certain schools are already utilising its services.
Carrier contended that multiple factors undermine that likelihood. He stated that the technology of the ARSAT 1 and 2 satellites, which deliver the company’s connectivity service, is “vastly outdated.” While ARSAT speeds range between 1 and 10 Mbps, Starlink provides 80 Mbps, a significant advantage when accommodating “multiple concurrent users.” Carrier also contended that Starlink kits are “significantly cheaper and easier to install.” ARSAT 1 and 2 are approaching the conclusion of their operational lifespan, with projected decommissioning dates set for 2030 and 2032, respectively. This situation could have been addressed with the deployment of the ARSAT 3 satellite, which possesses the capability to deliver broadband satellite internet services. Its development, however, has encountered a decade of setbacks. Construction commenced in 2015, coinciding with the concluding year of former President Cristina Kirchner’s second term; however, it was halted in 2016 by the Macri administration. The project was subsequently resumed under the leadership of President Alberto Fernández in 2020, who established a target launch date of 2023.
However, only half of the construction was completed. Deadlines have been extended once more under Milei, with the project now anticipated to commence operations in 2028. For Becerra, although this delay cannot be solely attributed to Milei, his administration has intensified it by defunding the scientific system — a hallmark of his austerity plan. The expert also observed that the government has frozen international funds upon which many of these programs depend. In this instance, a loan amounting to US$243 million from the Development Bank of Latin America and the Caribbean was sanctioned in 2021. Of that total, $160 million has already been disbursed. ARSAT sources confirmed that the construction and financing of the third satellite were suspended during the initial two years of Milei’s administration. They noted that, while activities partially resumed in 2026, numerous issues continue to exist. Among them, a $80 million debt that the government has yet to cancel and a 20% reduction in the company’s workforce. The rationale behind the latter? ARSAT employees have experienced a 50% decline in their purchasing power following the change in government.
