The South African government has taken a significant step toward amending its strict Black Economic Empowerment (BEE) laws in the telecommunications sector, introducing a policy shift that could pave the way for Elon Musk’s satellite internet service, Starlink, to launch operations in the country
The move comes in the wake of tense talks between South African President Cyril Ramaphosa and US President Donald Trump aimed at mending fraying diplomatic and economic relations.
Disadvantaged groups
Currently, telecom operators in South Africa are required to cede 30% ownership to historically disadvantaged groups – a regulation designed to address the legacy of apartheid.
Musk, who was born in South Africa, has staunchly criticised the rule, calling it “openly racist” and blaming it for Starlink’s delayed entry into the market.
On Friday, Communications and Digital Technologies Minister Solly Malatsi unveiled a draft directive that proposes allowing an equity equivalent programme in lieu of direct ownership transfers.
Under this model, companies could fulfill empowerment obligations by investing in local suppliers, job creation, or funding black-owned small businesses.
“The policy seeks to provide the much-needed policy certainty to attract investment into the ICT sector,” the ministry said in a statement, adding that the change would benefit broadcasters, ISPs, and network operators alike.
The draft regulation is now open for 30 days of public comment before finalisation.
Equity equivalent precedent
South Africa has previously allowed equity equivalent models for global tech giants such as Microsoft, Hewlett Packard, and Samsung Electronics.
A similar exception was granted to the automotive industry in 2019, encouraging investment while still meeting transformation goals.
The policy shift is widely seen as part of a broader effort by the Ramaphosa administration to boost foreign investment and stabilise trade relations with the US, which have deteriorated sharply under Trump.
The US president has cut aid, expelled the South African ambassador, and threatened new tariffs.
The two governments released a joint statement after their Washington meeting, pledging to strengthen trade, increase bilateral investment, and cooperate on technology exchanges.
While Starlink was reportedly discussed, officials clarified that the proposed policy change is intended to benefit the entire telecommunications sector.
In a related development, Lesotho granted Starlink an operating license just hours after denying the move was linked to US trade concessions.
If implemented, the draft policy could usher in a new wave of tech infrastructure investment in South Africa, particularly in rural areas, where internet access remains scarce.
According to a 2023 government survey, only 1.7% of rural households in the country have reliable internet access.
Is this a case of Donald Trump saying ‘jump’ and South Africa asking ‘how high’?
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