Starlink has spent months knocking on South Africa’s regulatory door, hoping to launch its satellite internet service in the country. It may have found an unlikely ally in Telkom, one of South Africa’s biggest telecoms operators, which is questioning some of the rules keeping it outside.
What happened? Telkom has challenged South Africa’s ownership requirements for telecoms licences in a submission to the Independent Communications Authority of South Africa (ICASA), the country’s telecom regulator. The company, in which the South African government holds a 40.5% stake, said the rules are too rigid and overlook other ways companies can support economic empowerment, such as skills development, local supplier investment and infrastructure funding.
Explain like I’m new here: South Africa’s Electronic Communications Act requires individual telecoms licence holders to have at least 30% ownership by historically disadvantaged groups. This has been a stumbling block for Starlink, which has resisted giving up a 30% stake to local investors.
Communications Minister Solly Malatsi proposed Equity Equivalent Investment Programmes (EEIPs) that would let foreign companies contribute through investments in local suppliers, skills development, infrastructure and digital inclusion instead of selling shares. However, the proposal attracted pushback, with Malatsi being accused of trying to circumvent the law to accommodate Starlink. ICASA opposed Malatsi’s proposal in May, but one wonders whether those critics will have the same objections now that a major local operator is also questioning the rules.
It’s more than Starlink for Telkom: The company argues that rigid ownership requirements could make it harder for telecoms operators to attract foreign capital and expand infrastructure. Allowing alternative empowerment mechanisms could give companies more flexibility to invest in skills and network infrastructure without changing their ownership structure.
If the rules also create uncertainty for established local operators, the question is whether South Africa can attract the foreign investment needed to expand its digital infrastructure without watering down its economic empowerment goals.