SA moves to ease rules to enable Starlink entry

Solly Malatsi, Minister of Telecommunications and Digital Technologies, directed the industry regulator to amend its rules on local ownership, which could pave the way for Elon Musk’s SpaceX and other satellite-internet companies to operate in the continent’s largest economy without ceding ownership.

“An overwhelming 90% of the submissions are in favour of the policy direction” that would allow equity-equivalent investment programs to count toward empowerment rather than insisting only on a 30% local black-ownership requirement, Malatsi said in a government gazette published Friday.
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Malatsi first proposed the changes on 23 May and issued the direction after his department reviewed 15 000 substantive submissions from the public.

Amendments along these lines would open the way for Musk to make Starlink services available in the country. The Pretoria-born billionaire has refused to relinquish any equity in the business to comply with rules that South Africa enacted to redress the economic imbalances wrought by apartheid laws. Musk has been called “openly racist”.

According to Malatsi, the Independent Communications Authority of South Africa’s (Icasa), current ownership regime does not recognise large parts of the ICT Sector Code approved by the Department of Trade, Industry and Competition (dtic), including equity equivalent investment programmes (EEIPs).

The EEIP is an alternative to ownership requirements for multinationals. They allow companies, which cannot sell equity to local companies, to instead invest in transformational, high-impact programmes that benefit South Africa and the economy.

Malatsi also raises concerns that Icasa has indicated, in its other regulatory instruments, its intention to continue applying its ownership rules.

The gazette records that Icasa has “stated its intention to apply the ownership regulations despite their non-conformity, and without approval by the dtic, alternatively to apply Section 9(2)(b) of the ECA without regard for the possibility of imposing ‘other conditions’.”

The Gazette notes that this “excludes the possibility of an international entity investing in the South African economy only because its global business policies do not allow ownership by third parties even where the dtic has recognised that the entity may qualify … for approval of an EEIP”.

Fears of market dominance

In the opposing submissions regarding the policy direction, concerns were raised about market dominance, local empowerment, regulatory loopholes, and security implications.

The gazette addresses these directly, stating that the Competition Commission, the Information Regulator, and other authorities exist to mitigate such risks.

In addition to alignment, Malatsi instructs Icasa to take into account “government’s national economic inclusion policy goals” and its own regulatory mandate. The regulator must “ensure parity among licensees, promote the rollout of broadband to bridge the digital divide and ensure the preservation of South Africa’s digital sovereignty by encouraging adherence to South Africa’s data protection and data security policies”.

Malatsi’s policy direction follows the department’s processing of close to 20 000 public submissions on proposed changes to South Africa’s empowerment framework. These changes would allow ICT companies, in certain circumstances, to meet transformation obligations through EEIPs rather than the standard 30% black ownership requirement.

A game-changer for SA’s disconnected 

A change to the industry rules would allow telecoms companies to invest in projects such as infrastructure, digital inclusion initiatives, or research that benefits previously disadvantaged communities.

Satellite technologies that rely on a constellation of low-Earth orbit satellites would be a potential game-changer for South African users who’ve historically faced expensive or unreliable internet options. Only 1.7% of rural households have access to the internet, according to a 2023 survey compiled by the nation’s statistics agency.

The exemption is already standard for several industries, including the nation’s automotive sector. In 2019, car manufacturers, including BMW, Ford Motor, and Toyota Motor, established a fund to bring disenfranchised groups into the industry.

Read: Musk’s Starlink in talks with South Africa to start service

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