Ramaphosa backs Starlink BEE reforms in South Africa

President Cyril Ramaphosa says he supports the proposal to offer alternatives to South Africa’s ownership requirements in the telecommunications sector, enabling players like Starlink to comply.

This comes after communications minister Solly Malatsi issued a policy directive proposing equity equivalent investment programmes (EEIPs) in the ICT sector, resulting in political backlash.

Network infrastructure operators and communications service providers require 30% ownership by historically disadvantaged groups to acquire licences to operate nationally in South Africa.

EEIPs would provide an alternative, allowing multinationals to commit to investing in the economy and contributing to digital transformation instead.

Responding to questions from the National Council of Provinces, Ramaphosa described Malatsi’s proposal as “very much in line with our laws”.

“There’s no violation as far as he’s concerned and as far as I’m concerned with regard to our laws, and it’s not specifically aimed at one or any company,” stated Ramaphosa.

“It is aimed at ensuring that from any other country who would want to participate in this process may find greater ease to do so, and it is aimed at synchronising the communications law with many others.”

The President said there will be public hearings before any changes are implemented. Ramaphosa described EEIPs as an “innovative” and “unique” solution.

“We came up with the equity equivalent measure, and many have embarked on this,” he said.

“They continue to embark on a number of initiatives that are equity equivalent, and they get involved in the transformation process of our country.”

The President emphasised that South Africa isn’t the only country in the world that requires local ownership for multinationals.

“We say: if you’re not able to have joint ownership, we want equity equivalence that will help address the injustices of the past,” Ramaphosa said.

A long road ahead

SpaceX has already approached the Department of Trade, Industry, and Competition (DTIC) to propose a R500-million investment in the South African economy through Starlink.

However, Ellipsis founder and regulatory expert Dominic Cull said South Africans will have to wait at least a year before Starlink could operate legally in the country.

He also cautioned that litigation could further delay the process. Starlink has become a political lightning rod, with Malatsi’s proposal attracting opposition thanks to statements by SpaceX founder Elon Musk.

According to Cull, Malatsi must finalise his policy direction before submitting it to the Independent Communications Authority of South Africa (Icasa).

The deadline for stakeholder comments on the directive is next week. After considering the submissions and consulting with the government, he can submit the final policy direction to the regulator.

“Estimate for this is six to nine months, but with the application of some political will, it could be done in four to six months,” said Cull.

The focus will then shift to Icasa, which will consider Malatsi’s proposal and decide how to proceed.

“Assuming Icasa agrees to open up a process to amend its regulatory framework on control, ownership, and transformation, then it will need to set up its internal structures and decide on a process to follow,” said Cull.

Icasa can launch the process and publish draft regulations for public comment afterwards. It will also have to host public hearings before finalising the amendments.

“The estimate for this is 12 to 18 months. There is a lot of scope for this process to be delayed by litigation,” said Cull.

“At this stage, Icasa would then have amended regulations that allow for an applicant for an individual licence to either have 30% equity ownership by historically disadvantaged groups or an EEIP agreement.”

Cull explained that SpaceX had already opened discussions with the DTIC about an initial offer on the EEIP agreement in parallel to save time.

“Even if they obtain this in the interim, they will still need to wait for Icasa to finish its process before they can apply for a licence or the transfer of a licence.”

He added that SpaceX has “excellent local representation” advising it on the most efficient way to achieve its desired outcomes.

“If the stars align in their favour, they could be targeting 12 to 15 months as their most optimistic timeline,” said Cull.