By Lehlohonolo Lehana.
Communications Minister Solly Malatsi has denied that his policy directive instructing communications regulator, Independent Communications Authority of South Africa (Icasa) to explore equity equivalence investment programmes in the ICT sector was designed to favour Starlink.
Malatsi appeared before Parliament to explain a proposed policy direction that could significantly alter the way South Africa regulates empowerment in the ICT sector – and possibly open the door to long-blocked players such as Starlink.
The summons follows a public backlash from parliamentary communications and digital technology committee chairperson Khusela Sangoni Diko, who questioned both the legality and motivation behind the minister’s move, describing it on social media as a “spectacular mess up of process and glaring invitation for litigation”.
Malatsi gazetted a Proposed Policy Direction to Icasa, instructing it to align its ownership regulations with the Amended B-BBEE ICT sector code.
The key shift? Recognising Equity Equivalent Investment Programmes (EEIPs) as an alternative to the existing 30% equity ownership requirement for electronic communications licensees.
Malatsi’s statement stressed a need to “unlock investment” and “accelerate broadband access” by offering multinationals alternative ways to meet empowerment obligations, such as investing in local suppliers, skills development, infrastructure and small businesses.
In her opening remarks at the briefing, Diko, said the timing of Malatsi’s directive was worth interrogating, especially considering that other satellite operators have been operating in South Africa under the status quo.
Malatsi insisted that there was no direct correlation between the release of the draft directive for comment and the meeting at the White House, stressing that the process to consider the integration of EEIP in the sector had been initiated in October.
He also argued that the proposed change was not designed to benefit a single individual or company, such as Starlink, but to ensure alignment between various pieces of legislation, including the ECA and BBBEE Act.
Malatsi also dismissed suggestions that he was seeking to undermine black empowerment, saying: “I’m pretty clear that transformation is sacrosanct in this country; that it’s non-negotiable.”
The use of EEIP, he added, did not represent a deviation from broad-based black empowerment, but offered multinationals an alternative way to meet their empowerment commitments.
The decision to proceed on the basis of a direction rather than an amendment to the ECA itself was defended as the most “effective” and “timeous” way to seek alignment between the legislation.
The Minister did not rule out an amendment of the ECA, however, indicating that he would be guided by the comments received on the draft policy direction.
He also confirmed that Icasa had expressed a preference for an amendment to the Act over a policy direction.
Lawmakers who are not members of the Democratic Alliance (DA), to which Malatsi belongs, were highly critical of the directive, the timing of its publication and the way it was released.
Several questioned whether the Minister was seeking to subvert both the ECA and the Icasa, while others suggested that the change would not only undermine transformation but also established and emerging participants in the sector.
Questions were also asked about the correlation between the draft policy directive on EEIPs and another draft policy direction published in a May 21 Gazette relating to the possible reopening of applications for Individual Electronic Communications Services Licences.
The potential reopening of licensing by Icasa to new participants could be correlated indirectly to the EEIP direction, the Department of Communications and Digital Technologies acknowledged.
However, it insisted that the process of assessing a reopening was being undertaken separately and had arisen as a result of a Competition Commission report of 2019 and was not in any way linked to the potential Starlink licence application.
There are currently 490 such licences and new market entrants typically negotiate with a holder of a licence to have the licence transferred.