South Africa’s government is set to change the rules for foreign communications companies, potentially allowing firms like Elon Musk’s Starlink to operate more freely in the country. The new draft policy looks to offer alternatives to the current requirement that foreign-owned telecom companies must sell 30% of their local shares to historically disadvantaged groups.
The rule is part of South Africa’s Electronic Communications Act, aimed at promoting Black economic empowerment by ensuring local ownership. However, companies like Starlink have criticized this rule, saying it blocks them from entering the market.
Communications Minister Solly Malatsi has introduced the idea of recognising “equity equivalent” investment programmes in the information and communication technology (ICT) sector. Instead of handing over direct ownership, companies could invest in skills training, infrastructure projects, or small business development to meet empowerment goals.
This approach has been used in other industries, such as the automotive sector, where global companies can’t always sell shares due to international regulations. The government hopes this new policy will encourage more foreign investment and expand broadband access across South Africa.
A statement from the communications ministry explained: “The policy direction seeks to provide the much-needed policy certainty to attract investment into the Information and Communication Technologies sector, and specifically with regard to licensing for broadcasters, internet service providers, mobile networks, or fixed and mobile networks.”
Last year, SpaceX, the parent company of Starlink, wrote to South Africa’s telecom regulator, ICASA, saying the 30% local ownership rule was a major obstacle to entering the market.
While the government moves to address these concerns, the plan has faced pushback from opposition groups and some lawmakers. The Economic Freedom Fighters (EFF), a major opposition party, has vowed to oppose any changes that weaken Black ownership laws.
In a statement on Wednesday, the EFF said, “We will oppose any compromising of our laws to allow for Starlink to operate in South Africa, and we will oppose any reversal of transformative legislation.”
This debate highlights the balancing act between attracting foreign investment and protecting South Africa’s historic efforts to promote economic inclusion and transformation.
The government’s policy shift is being closely watched by industry players and investors, as it could reshape the telecom landscape and affect the rollout of new technologies in the country.
As the ICT sector grows rapidly, expanding internet access and digital services remain key priorities for South Africa’s development. The new policy on equity equivalents may offer a way forward, but its success will depend on how it is implemented and whether it satisfies both business interests and social equity goals.
