SA proposes workaround for communication multinationals to adhere to local ownership laws

Image source: LipikStockMedia from Freepik

South Africa's Electronic Communications Act requires foreign-owned communications licensees to sell 30% of equity in their local subsidiaries to historically disadvantaged groups - a provision criticised by Starlink and other companies.

Communications Minister Solly Malatsi is now proposing the recognition of so-called "equity equivalent" investment programmes in the information and communication technology sector.

Equity equivalents, recognised in other sectors such as automotive industry, are in a form of investments made by multinationals in lieu of a direct sale of equity if global practices prevent them from doing so. Such investments include funding skills development, infrastructure or development of small enterprises.

According to the communications ministry, the proposed policy direction on the role of these investment programmes in the sector is expected to spur more investment and boost broadband coverage.

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"The policy direction seeks to provide the much-needed policy certainty to attract investment into the Information and Communication Technologies sector, and specifically with regard to licensing for broadcasters, internet service providers, mobile networks, or fixed and mobile networks," the ministry said in a statement.

Starlink's parent company SpaceX wrote to telecommunications regulator Icasa last year that local shareholding laws were a significant barrier and that it should rethink the 30% ownership requirement for licensees.

In acting on those concerns now, the government drew criticism from the opposition and some lawmakers that it was going too far to appease foreign businesses like Starlink.

On Wednesday, opposition party the Economic Freedom Fighters (EFF) said that it would oppose "any compromising of our laws to allow for Starlink to operate in South Africa, and we will oppose any reversal of transformative legislation."