A pending review of regulations to make it possible for foreign companies to invest in ICT without having to sell a 30% equity stake to black people is not a special dispensation for Elon Musk's Starlink or any other company.
This is according to communications & digital technology minister Solly Malatsi, who is in discussions with the Independent Communications Authority of South Africa (Icasa) on the introduction of equity equivalents as an alternative to the 30% black ownership requirement.
Equity equivalents were introduced by the department of trade, industry & competition as part of the broad-based BEE codes of good practice to enable multinationals to invest in areas such as skills training, development of small and medium-sized enterprises, and research & development, instead of selling equity to black people.
ICT multinationals such as Microsoft, HP and IBM have invested billions of rands in these alternatives as a way of entering or expanding in the South African market instead of giving away equity.
Malatsi said that since equity equivalents are applicable in other sectors but not in the telecom-regulated space, “the question I want answered is whether in the ICT sector it should be applicable”.
“That is not a pursuit for advancing one company or another. I just want it to be clarified and that can be done through engagement with Icasa.”
The minister is studying the telecom regulator's response to his proposal before he can issue a policy directive to amend the Electronic Communications Act, which legislates the 30% rule.
“I am considering Icasa’s feedback to determine whether a policy directive is the appropriate instrument — or maybe another instrument can answer the question about EE [equity equivalents] other than a policy directive.”
As of now I can’t even say if we agree or not. It is still a process that needs to be tested with the public.
— Icasa chair Mothibi Ramusi
Musk has described South Africa's ownership laws as racist. Many believe the Starlink impasse was the basis for a broader sanction of South Africa over so-called land grabs by US President Donald Trump.
Business Day reported this week that Icasa chair Mothibi Ramusi, in a briefing to parliament's portfolio committee on communications & digital technologies, told MPs and the minister that the introduction of equity equivalents in the telecommunications sector required proper processes and consideration.
“As it stands right now we have never had an equity equivalent model within the industry that we regulate. We are still doing our analysis. As of now I can’t even say if we agree or not. It is still a process that needs to be tested with the public,” Ramusi is reported to have told the committee.
The debate about equity equivalents for the telecom sector came into the spotlight in recent months after it emerged that Musk’s Starlink, through its parent company SpaceX, objected to the 30% black ownership requirement and withdrew from Icasa's public hearings on the proposed new licensing framework for satellite services.
Starlink provides high-speed broadband access through satellite transmission to a number of countries in Africa and the world.
Bruce Hunt, MD at Transcend Capital, a specialist employee share ownership programme and BEE ownership transaction adviser, said “a well-crafted equity equivalent programme could be a game-changer, benefiting both Starlink and South Africa”.
“Instead of focusing solely on direct ownership, Starlink could invest in initiatives that directly benefit black-owned businesses and communities.”
Hunt highlighted some of the successful equity alternatives run by companies such as Amazon, which supports black-owned businesses in the ICT sector through technical training and grants, and JPMorgan's Abadali Fund, which focuses on empowering black entrepreneurs in financial services.
“These examples demonstrate that alternative pathways to empowerment can be both impactful and sustainable,” he said.
Hunt said Starlink’s underutilised bandwidth could be discounted for educational institutions and entrepreneurs from underrepresented communities. “This would expand digital access, foster entrepreneurship and maximise social impact at a low cost.”
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