Elon Musk-owned SpaceX supports South Africa’s Broad-Based Black Economic Empowerment (BBBEE) legislation regarding getting approval to launch its Starlink Internet service locally.
However, it argues that one particular telecoms licence ownership rule that the Independent Communications Authority of South Africa (Icasa) uses does not align with the country’s BBBEE laws.
The company’s criticism of Icasa’s rules forms part of its submission on the communications department’s policy direction on equity equivalent investment programmes (EEIPs) in the ICT sector.
The policy aims to provide an alternative pathway for global companies to do business in South Africa without relinquishing equity to South Africans classified as historically disadvantaged.EEIPs are used in various industries, including the technology sector, where companies like Amazon and Microsoft contribute monetary or infrastructure investments or run development programmes.
SpaceX applauded the policy direction’s objective of reducing regulatory barriers and harmonising the regulations with the ICT Sector Code.
SpaceX argues that one of Icasa’s criteria for achieving economic transformation differed significantly from those of the ICT Sector Code.
“This creates significant regulatory uncertainty and complexity for market participants, whether they are existing incumbents, such as the mobile network operators, or potentially new market entrants,” it said.SpaceX explained that Icasa’s requirements for a telecoms licence included three criteria:
SA requirement — They must be a South African individual, they a company registered in South Africa.
BBBEE requirement — They must be a level 4 BBBEE contributor in terms of the ICT Sector Code.
Ownership requirement —They must be 30% owned by historically disadvantaged groups and, in future, black people.
The company said the first two criteria were aligned with the requirements of the Electronic Communications Act (ECA) and the ICT Sector Code. SpaceX said Parliament clearly envisaged that Icasa had the power to consider conditions other than direct equity ownership of licensees by South Africans.
This would permit foreign operators to hold significant stakes in licensed entities, as long as they adhered to the SA and BBBEE requirements.
“Any requirements in Icasa’s regulations that deviate from the ICT Sector Code potentially contravene the provisions of the BBBEE Act as well as the requirements of the Icasa Act,” the company said.
“Moreover, it is simply not desirable to create parallel legal regimes when harmonisation is both legally required and practically beneficial.”
SpaceX added that South African law has long recognised that ownership is just one aspect of empowerment.
“The BBBEE Act itself defines broad-based black economic empowerment as encompassing diverse but integrated socio-economic strategies,” SpaceX said.[These include] increasing black ownership, facilitating community ownership, human resource and skills development, achieving equitable workforce representation, preferential procurement, and investment in black-owned enterprises.”
SpaceX said that the policy direction “appropriately” directed Icasa to urgently consider alignment of its ownership regulations with the ICT Sector Code.
“This alignment is both legally required and practically necessary to achieve South Africa’s broadband and empowerment objectives,” SpaceX said.
SpaceX added that EEIPs, in particular, would provide much-needed regulatory certainty and foster investment in infrastructure that is essential for bridging the digital divide.
“This approach is consistent with the global nature of multinational corporations’ operations and provides an avenue for alternative ways to impact South Africa’s socio-economic development,” it said.The company has promised R500 million in investment towards free Internet facilities at 5,000 schools in South Africa’s rural areas.
