South Africa’s Department of Communications and Digital Technologies has proposed a new policy direction that could ease regulatory hurdles for foreign-owned telecommunications firms seeking to operate within the country. The proposed measure would recognise “equity-equivalent” investment contributions in lieu of the currently mandated local ownership stake of 30%, potentially unlocking operations for companies like Starlink, the satellite internet provider owned by Elon Musk’s SpaceX.
Under the Electronic Communications Act, all licensees with foreign majority ownership are required to cede 30% of their local operations to historically disadvantaged South Africans. While intended as a mechanism to address the country’s legacy of exclusion and economic disparity, the provision has been described by some multinational corporations as a significant barrier to entry.
In a formal policy notice issued by Communications Minister Solly Malatsi, the government now proposes recognising “equity-equivalent” initiatives in the ICT sector, similar to practices already established in industries such as automotive manufacturing. These alternatives could include investments into digital infrastructure, skills development, and support for small and medium-sized enterprises, which are deemed to have transformational impact without altering shareholding structures.
The policy aims to stimulate investment, enhance broadband access, and provide much-needed regulatory clarity, particularly for broadcasters, mobile networks, internet service providers, and satellite operators. The Ministry stated that the new direction seeks to “provide the much-needed policy certainty to attract investment into the Information and Communication Technologies sector.”
Last year, SpaceX submitted formal correspondence to South Africa’s telecommunications regulator, the Independent Communications Authority of South Africa (ICASA), expressing concern that the existing equity ownership requirement posed a critical obstacle to the deployment of Starlink in South Africa. The company urged South African authorities to reconsider the stipulation, which they argue is misaligned with their global operating model and could inhibit service delivery to underserved regions.
The proposed reform, however, has attracted sharp criticism from political opposition. The Economic Freedom Fighters (EFF), a vocal advocate of radical economic transformation, condemned the move, asserting that it constitutes a concession to multinational interests at the expense of local empowerment objectives. In a statement released on Wednesday, the EFF declared its intent to resist any deviation from laws designed to redress historical injustices and ensure broad-based black economic empowerment.
While the debate continues, the government maintains that the inclusion of equity-equivalent provisions does not signify a retreat from transformation imperatives but rather an adaptation to global commercial realities. Officials argue that these provisions can deliver tangible empowerment outcomes without deterring essential infrastructure investments.
As the public comment period on the draft policy unfolds, stakeholders across the ICT and political spectrum will likely engage intensively on the implications for South Africa’s digital development trajectory and the future of regulatory reform in the sector.
