South Africa-born American billionaire Elon Musk’s Starlink will find welcoming competitors in South Africa if the satellite internet provider's entrance into the country goes ahead. However, the local sector still faces several challenges that affect all mobile network operators.
Parliament’s portfolio committee on communications & digital technologies heard from Vodacom, MTN, Cell C, Telkom, Rain and the Association of Communications and Technology (ACT) on Friday after it asked the mobile network operators to brief MPs on the state of the local telecommunications sector, including challenges, progress made on universal connectivity, the cost of communication, regulation and SMME development.
MTN SA CEO Charles Molapisi told the committee that outside South Africa the operator has partnerships with non-terrestrial and satellite players such as Starlink. He said he welcomed Starlink to South Africa, as MTN would welcome all competition.
“We see the non-terrestrial players as partners. I always say we are not fixated on one key player,” Molapisi said. “We see satellite players as one bundle. I’m sure the committee is aware that in some of our markets outside South Africa we’ve already done partnerships with the likes of Starlink.
“There is no contradiction on that and the South African position. Those countries are managed by their own rules and legislation, as are we. There is no contradiction about the fact that we welcome the competition but also see them as complementary [to us].”
Molapisi said a secondary market for spectrum capitalisation and enabled spectrum trading would be helpful to the sector to allow services to be provided at scale and at lower cost.
President Cyril Ramaphosa visited US President Donald Trump last month to ease tensions over the government’s policy of land expropriation and discuss trade and tariff issues. Trump’s rhetoric caused market jitters in South Africa.
Trump was of the mistaken view that the government was seizing white-owned land and that “white genocide” was taking place in South Africa. Trump had appointed Musk — a vocal critic of South Africa's empowerment laws — as head of the US's department of government efficiency, though the world's riches man has since left the White House in dramatic fashion.
In the same week, South Africa's communications minister, DA MP Solly Malatsi, gazetted a draft policy allowing telecommunications companies to use equity equivalents, instead of being black-owned or broad-based BEE-compliant, to enter the local market, ostensibly to accommodate Starlink.
At the meeting with the parliamentary committee, Molapisi also raised the issue of load-shedding and vandalism, and their impact on service. He said that in 18 months, MTN spent R4bn to deliver services during load-shedding.
Sitholizwe Mdlalose, CEO of Vodacom SA, told the committee that when load-shedding was at its peak, the company spent more than R3.3m a month on diesel.
Vodacom said previously that it was guided by Ramaphosa’s recent remarks that Starlink had not been discussed in meetings with the US government and international relations minister Ronald Lamola's remarks that the government’s commitment to attracting foreign direct investment did not refer to Starlink.
The first thing we have to understand is that we want Starlink, especially for poorer people in rural areas. But unfortunately politics is standing in the way.
— Dawie Roodt, economist at the Efficient Group
“Vodacom recognises satellite networks as complementary to mobile and fixed networks,” Mdlalose told the committee. “We believe they play a role in accelerating digital inclusion and bridging the connectivity divide, especially in hard-to-reach areas.
“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. Any new entrant to the South African telecommunications sector should be subject to the same regulatory requirements that govern licensed operators.”
Committee chair Khusela Diko told Business Times that the discourse surrounding Starlink’s entry into South Africa had to take into account that, of all of the challenges that mobile network operators have raised about operating in the country, none has raised BBBEE as a hindrance to investment.
“The mobile network operators have said that what they would want is regulatory parity, which essentially means they want the playing fields to be levelled ... What concerns us is that regulatory parity could also mean that they would then have to offload their existing empowerment shareholders and move the way of equity equivalents,” Diko said.
“What is called an equity equivalence — these companies are already doing it anyway. They have been speaking on enterprise and supplier development [and] universal service obligations. So it doesn’t bring anything new to the sector. But also, it’s a fallacy to say that the BEE requirement in the Electronic Communications Act [ECA] hinders competition. There’s absolutely no basis for that.”
Diko said Malatsi must make progress with gazetting and tabling an updated version of the ECA, or the committee would work to introduce a committee bill or a private member's bill themselves. She said there was no indication in the department’s annual performance plan of an intention to bring the ECA before parliament this year.
“You cannot change the law via policy directives. Now we’re sitting in this meeting and the ECA [is under discussion]. We have been telling him, just update the law, stop taking shortcuts. The ECA is under discussion and the industry is saying it has to be amended.”
An updated Electronic Communications Bill is expected to lock in BBBEE for the telecommunications sector to avoid a fallout over the provision of equity equivalents as a result of Malatsi's gazetted directive.
Nomvuyiso Batyi, CEO of the ACT, told the committee there needed to be more regulatory alignment in the sector as regulatory and political uncertainty often paralyses investment.
Dawie Roodt, economist at the Efficient Group, said he believed the Starlink deal would go ahead despite the fallout between Trump and Musk, as the South African government could not afford to appear as if it had buckled under pressure to appease Washington.
“The first thing we have to understand is that we want Starlink, especially for poorer people in rural areas. It’s reliable and fast,” Roodt said. “But, unfortunately, politics is standing in the way.
“Maybe there is an element [of appeasing Trump] there, but you can’t make an announcement like that and then backtrack, because then it will be very clear that they were buckling under pressure.”
Roodt said the government was in a predicament due to the extension of equity equivalents to the telecommunications sector, as more sectors would be inclined to put pressure on the government to have this extended to them.
“This just goes to show that this whole BBBEE approach is just wrong for the economy. If you make an exception here, the pressure will pile up to make an exception in other industries. I think the government will try to stick to its guns as far as they possibly can, but pressure will come from other industries.”
During Friday’s committee meeting, EFF MP Sinawo Thambo asked the companies for their position regarding Starlink — “a company owned by a person who spread disinformation about South Africa” — and the company’s pending entrance into the local market. Thambo asked if any of them had ties to Starlink.
Cell C CFO El Kope said the network aimed to boost black-owned supplier participation and build a more inclusive and competitive ecosystem with 17 qualifying small enterprises and exempted microenterprises on their database.
Lunga Siyo, Telkom CEO for consumer and small business, said the company viewed new players in the sector as partners who could contribute to enhancing connectivity, especially in peri-urban and rural areas.
Rain account manager Kgomotso Phooko said policy certainty was crucial to the sector, which had intense levels of technology and infrastructure investment, and where innovations were updating technology regularly.
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