To properly implement the policy direction on the role of equity equivalent investment programmes (EEIPs) for telecoms licences would require changes to the law, says the Independent Communications Authority of South Africa (ICASA).
The telecoms regulator was finally responding to the policy impasse that is viewed as a mechanism that would clear Starlink’s path into the country.
In a statement, the regulator reiterates its position on the broad-based black economic empowerment (B-BBEE) policy direction issuedby communications minister Solly Malatsi in December, noting it has been communicated to the ministry.
According to ICASA, it remains committed to advancing transformation, empowerment and economic inclusion within the telecommunications sector and all other sectors it regulates.
“ICASA is enjoined to advance the historically-disadvantaged groups as guided by the Electronic Communications Act (ECA), which requires a minimum 30% ownership by historically disadvantaged groups for individual licence-holders,” it states.
“In considering the policy direction, ICASA notes that while the amended ICT Sector Code must be applied in licensing qualification criteria, full alignment with all provisions of the code, including EEIPs, would require a legislative amendment to the current ECA.”
ICASA states it will continue to engage with the ministry “within the confines of its mandate”.
In December, Malatsi gazetted his final policy direction recognising EEIPs, directing ICASA to use these as an alternative to the ECA’s requirement that telecoms network service providers be 30% owned by historically-disadvantaged groups before they can get a licence.
South African-born billionaire Elon Musk has been eyeing bringingStarlink to his home country for some time now, criticising the regulatory and ownership requirements to make the service available locally. Starlink is operational in several neighbouring African countries.
Local law requires that telecoms operators meet ownership and empowerment conditions, including a minimum 30% stake held by historically-disadvantaged South Africans, which Starlink has not yet complied with.
Instead of selling a proportion of the entity to black-owned entities, Musk has lobbied for EEIPs as an alternative.
EEIPs are a mechanism through which international companies can secure empowerment status without a sale of equity. Among ICT multinationals that have implemented programmes under EEIPs in terms of the ICT Sector Code are HP, Microsoft, IBM, Dell Technologies, Samsung and Amazon Web Services.
Implementing EEIPs in telecoms would enable multinational companies that can’t sell equity to become empowered and be awarded telecoms licences. Malatsi’s policy direction has been broadly seen to be pro-Starlink.
The minister has on several occasions refuted this, indicating it is not only Starlink or company X. According to Malatsi, there is lack of uniformity within the ICT sector, in terms of the application of the empowerment laws that are recognised and applicable.
South Africa’s licensing framework for satellite services and transformation laws has played out ever since Malatsi announced his plans to lower regulatory hurdles that inhibit investment in the country.
After the policy was gazetted last year, the Portfolio Committee on Communications and Digital Technologies, the Economic Freedom Fighters and the African National Congress (ANC) called for its immediate withdrawal.
In a statement at the time, portfolio committer chairperson and ANC MP Khusela Sangoni-Diko said Malatsi, in his capacity as minister, has neither the legislative nor moral authority to reverse the gains of democracy through this “unilateral action”, unsupported by ICASA, or the department he leads.
She added that the minister had not sought the approval of Cabinet to gazette the policy directive, which would be reasonably expected, given the importance of the matter.
“These policy directives are an affront to the centuries-old fight for equity and redress by the black majority in this country. They further unintelligibly obfuscate existing law in a spirited attempt to circumvent the mandatory 30% equity ownership by historically disadvantaged groups as a requirement for electronic communications services licensing as under section 9(2)(b) of the ECA,” said Sangoni-Diko.
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