Communications and digital technologies minister Solly Malatsi insisted on Tuesday it was within his power as minister to issue a draft policy directive on equity equivalents and it was not necessary that this be taken to the cabinet for approval.
His draft directive did not involve an amendment to the Electronic Communications Act, which requires either 30% ownership by the historically disadvantaged in telecommunications operators and/or compliance with other legislation such as the BBBEE Act, which offers equity equivalents as an alternative to ownership.
However, industry regulator the Independent Communications Authority of SA (Icasa) issued a regulation in 2021, which requires at least 30% equity ownership by black people for certain communication and broadcasting licences.
Malatsi’s view differs from that of minister in the presidency Khumbudzo Ntshavheni, who said when questioned at a recent post-cabinet media briefing about Malatsi’s policy directive, that any such change to the Electronic Communications Act would require cabinet approval and could not be introduced by Malatsi alone.
Malatsi stressed in a speech to the Cape Town Press Club that his draft policy directive was not “ministerial overreach”, noting the previous seven ministers of communications had issued 12 policy directives.
An equity equivalent alternative could open the way for satellite company Starlink to operate in SA as one of the objections of its owner, Elon Musk, has been the 30% black ownership requirement. But Malatsi emphasised his policy directive was not aimed at Starlink specifically, nor to allow it or any other company to circumvent transformation laws. It was meant to attract investors into the ICT sector.
Malatsi pointed out the medium term development plan — fully endorsed by the cabinet — recognised the implementation of the equity equivalent investment programme as one of its medium-term targets.
The policy directive will have to be considered and decided upon by Icasa, but Malatsi said Icasa would have to consider the rationale behind the directive as well as the submissions made during the 30-day period for public comment.
Icasa, Malatsi said, was being asked to align its licensing requirements with the ICT sector code of good practice and the BBBEE Act to allow transformation alternatives other than equity ownership. Transformation remained non-negotiable.
The department of trade, industry and competition, in consultation with Malatsi’s department, would have to approve any proposed equity equivalent investment programmes. The power to grant a licence would still rest with Icasa.
“The policy directive is one of a range of interventions that I am leading to create regulatory certainty in the ICT sector so that SA’s market becomes more and more attractive to potential entrants. We are in the process of reviewing a range of policies that would modernise our regulatory framework to be more aligned with the modern technology landscape. In the end our goal is to unequivocally increase competition in the market,” he said.
Connectivity in itself could be transformative, Malatsi said, adding that he had made it his mission to address the digital divide in SA that had entrenched existing inequalities, by increasing the number of people connected to affordable and reliable broadband internet. He estimated that there were about 21-million people in SA who were outside the digital boundaries.
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