BEE tweak ‘not created for Musk’

DA communications minister Solly Malatsi has strongly defended a policy directive he issued that seeks to relax BEE regulations in the ICT sector and could open the door for Elon Musk’s Starlink.

The move has drawn sharp criticism from the ANC, with one senior leader describing it as “a win for the DA”. An organisation advocating for the ICT sector called it illegal.

Some have questioned the timing of the gazetting of the directive, one day after President Cyril Ramaphosa returned from his White House meeting — which Musk attended. Musk and US President Donald Trump have condemned South Africa’s empowerment laws.

The minister has the power to give policy directions under the ECA, which is what I have done
— Solly Malatsi,communications minister

The Pretoria-born billionaire has rejected the 30% black ownership requirement that would allow Starlink to operate in the country.

The Sunday Times understands that major telecommunications companies are studying the directive carefully, with a view to challenging it in court should they feel it was introduced to favour Musk’s company.

Speaking to the Sunday Times yesterday, Malatsi denied the directive was drafted to create a special regime for Musk and said the timing of its publication was coincidence.

“The policy direction is given under the Electronic Communications Act [ECA] … the minister of communications & digital technologies has the power to give policy directions under the ECA, which is what I have done.

“There was no political pressure. We began working on this as early as last year when we issued the intention to do a policy directive. The timing is an issue that will have different people having different opinions,” he said.

Parliament’s communications committee, led by the ANC’s Khusela Diko, has summoned Malatsi to appear before it on Tuesday to explain what “appears to be in contravention of the ECA” and “in favour of” Musk’s satellite-based internet service.

A senior ANC leader who asked not to be named said: “It’s been a DA proposal for a long time, so this is a win for the DA. The [party] has been saying for a long time why we are imposing a 30% ownership on Starlink, which would likely benefit only a few comrades, instead of having an equity share project that will benefit small businesses. So, this kind of compromise works for the DA, and they jumped at it. It’s one of their main issues.”

But DA leader John Steenhuisen insisted the move was “a positive” for the economy.

“We need to understand that if we want to grow the economy and create jobs, decisions need to be made. And you know, the days of us dithering over these things are over,” he said.

We in South Africa need to stop finding a million reasons why something can’t happen instead of the 10 reasons why it can happen
— DA leader John Steenhuisen

“I think it is a net positive for South Africa, and we in South Africa need to stop finding a million reasons why something can’t happen instead of the 10 reasons why it can happen.”

Steenhuisen, who was part of the delegation that accompanied Ramaphosa to the US, said Malatsi had his full support.

“It’s not for Starlink specifically, it’s for the sector, because you have to pass regulations of general application.

“But certainly what it will do is open the door for Starlink to come into South Africa on an equity alternative basis, and that has to be a win for particularly people in periurban and rural areas. And could also be nicely linked to the how we improve rural safety,” said Steenhuisen.

The likelihood that Starlink would be an issue at the talks in Washington is said to be the reason Ramaphosa’s special envoy, Mcebisi Jonas, stayed at home. Jonas is chair of the board of MTN, a potential rival of Starlink’s.

“Once it became clear that the Starlink deal would be central to what the South Africans would be offering, the presidential envoy said he could not be part of the trip as he would be conflicted since he is also chair of MTN, which may have issues with the deal,” a source close to him said.

But it is understood that Starlink was not discussed in the meetings, despite the presence of Musk.

Arthur Goldstuck, CEO of World Wide Worx, said Starlink would not replace mobile networks or fibre in cities, but posed a challenge to the big players as it bypasses traditional bottlenecks of spectrum, licensing and physical infrastructure.

“This creates a parallel model of access that is harder to regulate or contain within standard competitive frameworks,” he said.

“The biggest long-term threat is not to market share, but in the erosion of market dominance. When a global player can offer connectivity without using local infrastructure or relying on national networks, it erodes the strategic control local operators have traditionally enjoyed over access, pricing and pace of rollout,” Goldstuck said.

A nonprofit organisation doing advocacy work for the ICT sector, the Association of Comms and Technology, said allowing new entrants to bypass ordinary licensing procedures, including empowerment obligations, could create an uneven playing field.

The association’s CEO, Nomvuyiso Batyi, said the ECA stipulated that multinationals seeking licences to operate in South Africa must comply with the 30% black ownership rules.

“It’s not legal. If you want a license as a multinational, the ECA trumps equity equivalents.”

This is not specific to Starlink, but a matter of principle. Any new entrant to the telecommunications sector should be subject to the same regulatory requirements that currently govern licensed operators
— Byron Kennedy, Vodacom spokesperson

Batyi said the only way Malatsi could introduce equity ownership in the sector was through an amendment of the act.

“It’s setting [the regulator] Icasa up for failure... They will hold hearings, do a market study and do all these time-wasting things, and in the end say to the minister ‘We have considered your policy directive and unfortunately we cannot implement it’,” she said.

MTN spokesperson Nompilo Morafo said the company, Africa’s largest network operator, embraced a future incorporating low-earth-orbit (LEO) satellite services such as Starlink. But “what is expected of terrestrial networks, such as wireless and fixed broadband networks, should equally apply for non-terrestrial networks such as LEO communication systems”, she said.

"‘Same service, same rules’ means for example, that we do expect regulatory parity on issues such as customer registration, data privacy, data transport, lawful interception, access to spectrum, quality of services, rural coverage obligations and localisation requirements.”

The company said a differential policy environment could jeopardise investment for a sector that required high annual capital investment to sustain growing data demand.

Vodacom spokesperson Byron Kennedy said the company believed there must be a level playing field for all market participants.

“This is not specific to Starlink, but a matter of principle. Any new entrant to the telecommunications sector should be subject to the same regulatory requirements that currently govern licensed operators,” he said. These include: