Communications minister Solly Malatsi has denied that his policy directive instructing communications regulator Icasa to explore equity equivalence investment programmes in the ICT sector was designed to favour the Elon Musk-owned Starlink.

Musk has been a vocal critic of what he has described as South Africa’s “racist” black economic empowerment laws, saying repeatedly that Starlink cannot obtain an operating licence in South Africa “because I am not black”. Current telecoms sector licensing requirements stipulate that foreign companies with licences here should have at least 30% of their equity held by historically disadvantaged persons (HDPs).

Equity equivalents, which are used extensively in other sectors of the economy, are meant to give foreign companies an alternative to local shareholding rules, making it easier for them to comply and invest. The ICT sector codes allow for the use of such programmes, but the Icasa Act does not, which has led to a lack of policy clarity in the sector.

The briefing by parliament was called in part to interrogate the timing of Malatsi’s release of the policy direction, which came just two days after South African billionaire Johann Rupert – as part of a White House delegation led by President Cyril Ramaphosa – told US President Donald Trump that South Africa “needs Starlink” and other American technology to combat the scourge of violent crime in the country.

Curious timing

In her opening remarks at the briefing, communications portfolio committee chair, the ANC’s Khusela Diko, said the timing of Malatsi’s directive was worth interrogating, especially considering that other satellite operators have been operating in South Africa under the status quo. Malatsi is a Democratic Alliance MP. Diko said it was important that the committee interrogate whether Malatsi, as minister, was “exercising his executive powers in a rational and lawful manner”.

“This work predates the events of last week, which was the third layer of the events culminating in the gazette,” Malatsi told parliament. “I want to be clear that it is not about introducing a dispensation for any individual nor any company, or about introducing preference.”

Read: South Africa tables Starlink-friendly policy shift

Malatsi said work on the policy direction, which is still in draft form, began in September 2024. On 4 October, “as required by the process that outlines how policy directives should be handled”, the communications department sent a letter to Icasa notifying the regulator of the department’s intention to issue a policy directive aimed at “providing clarity on the introduction” of equity equivalence programmes in the ICT sector, the minister said.

A draft version of the document was then handed to Icasa to allow the regulator to “engage with it” and subsequently provide feedback to the communications department. “We are obliged by law to give Icasa the opportunity to establish its opinion on what should be done to address the question of reconciliating the ICT sector codes and the regulations around licence ownership,” he said.

Responding to the suggestion he was acting in contravention of the Electronic Communications Act, Malatsi quoted the legislation: “The minister may issue to the authority (in this case Icasa) policy directives that are consistent with this act, national policies and related legislation.”

Malatsi said that in drafting the policy directive, the communications department relied on local ownership stipulations in the ECA as well as the ICT sector codes.

The sector codes recognise ownership and other forms black economic empowerment, including management composition, skills development, enterprise and supplier development, and any other specific contributions relevant to the sector.

Malatsi said equity equivalents “have been a longstanding regulatory tool” in the sector and were approved by the communications department as far back as 2016.

“The intention is to ensure that there is a whole and consistent application of the B-BBEE Act and the ICT sector codes. This includes the key element of ensuring that transformation takes place in the telecommunications and broadcasting sectors in the same way it is applicable in other sectors, through the enablement of broad-based black economic empowerment,” said Malatsi.  – © 2025 NewsCentral Media

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