The government may face opposition from local network operators if more concessions are made to allow foreign telecom companies such as Elon Musk’s Starlink to enter the SA market using a different set of rules.
Communications & digital technologies minister Solly Malatsi gazetted a policy directive on Friday on the role of equity equivalent investment programmes (EEIPs) in the information and communication technology (ICT) sector “as a mechanism to accelerate broadband access”.
The rules governing who can acquire a licence to provide electronic communications services or to operate a network require a minimum of 30% of shares to be in the hands of historically disadvantaged individuals.
The government’s move to address SA-born Musk’s biggest gripe with BEE laws he is insistent he will not abide by would open the door for Musk to start operating in SA.
The timing is also key given last week’s tense exchange between President Cyril Ramaphosa and US President Donald Trump in Washington, underscoring a precarious trade relationship.
EEIPs allow qualifying multinationals to meet empowerment obligations through alternatives to 30% ownership — “such as investing in local suppliers, enterprise and skills development, job creation, infrastructure support, research and innovation, digital inclusion initiatives, and funding for SMMEs”.
While wiggle room has now been created over ownership, the question is whether the government will make further concessions to attract the sought after foreign investment. In a highly regulated industry such as telecommunications, such allowances are likely to be seen as giving unfair advantages.
Nomvuyiso Batyi, CEO of the Association of Communication and Technology (ACT), told Business Day recently that SA operators have no problem with more players entering the market as long as there is regulatory parity.
She said the Independent Communications Authority of SA (Icasa) — the industry regulator — should ensure “that it’s fair game for everyone. Don’t have special concessions for certain parties.
“I know the debate with some people has become a race-based war. We don’t get into that. For us, we’re looking at the regulatory and policy environment.”
The ACT is an industry body safeguarding the interests of SA’s large telecom operators. The nonprofit organisation comprises operators Cell C, Liquid Intelligent Technologies, MTN, Rain, Telkom and Vodacom.
“People, when they invest in SA, want certainty. If a person wants to come in [to SA], they must get in through the gate, not the gate of the presidency. The gate is Icasa. Because it will be setting a precedent that each time someone wants to come into SA, they go and talk to the president instead of going to talk to Icasa, and making the appropriate applications,” Batyi said.
SA’s two largest mobile operators reiterated this view.
“Telecommunication is a highly regulated industry and capital intensive, and we would anticipate that for all market participants that for the same service, [the] same rules would apply,” said an MTN spokesperson.
“Our position has consistently been that there must be a level playing field for all market participants. This is not specific to Starlink, but a matter of principle,” said Vodacom.
“Any new entrant to the SA telecommunications sector should be subject to the same regulatory requirements that currently govern licensed operators.”
For Vodacom, this includes adherence to:
- Spectrum licensing and usage conditions;
- Data privacy (Popia);
- Interception compliance (Rica);
- Social and open access obligations;
- Interference management between satellite and terrestrial networks; and
- Broad-Based BEE, including all scorecard elements, not just ownership.
Both operators said they were studying the gazette and would be making submissions within the allocated 30 days.
Malatsi’s department is set to explain the new directive to parliament’s communications committee on Tuesday.
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