Starlink's bid for South Africa entry: Public still has time to weigh in on EEIP policy
In a previous article published in March, I examined Starlink's plans to enter the South African market and its dispute with the Independent Communications Authority of South Africa (Icasa), the country's telecoms regulator. The dispute relates to licensing requirements under the Electronic Communications Act 36 of 2005, which mandates that 30% of equity in licensed entities be held by historically disadvantaged South Africans, and is part of the country's Broad-Based Black Economic Empowerment (B-BBEE) policy.
Image source: Freepik
Starlink argued that its global policy does not allow for dilution of ownership, and that the 30% local shareholding requirement hinders foreign investment in South Africa. As an alternative, Starlink has proposed equity equivalent investment programmes (EEIPs), which have received support from the Minister of Communications and Digital Technologies, but not yet from Icasa.
Public hearings
This situation reflects broader tensions between promoting foreign investment and technological advancement, especially for rural connectivity, and upholding local transformation policies. Starlink's potential entry could also disrupt local telecommunications competition.
In February 2025, Icasa held public hearings on a proposed new satellite licensing framework and received over 50 written submissions. SpaceX, Starlink's parent company, submitted written input but withdrew from the oral hearings. Icasa is reviewing all submissions and has indicated a willingness to find balanced regulatory solutions that support innovation and inclusivity.
Although Starlink withdrew from making oral submissions at Icasa's public hearings in early February, its arguments appear to have been both heard and seriously considered. As mentioned in the previous article, the written representations by Starlink included support for EEIPs as an alternative to the 30% local shareholding requirement, stating that it will attract foreign investment in South Africa. A mere three months after holding the public hearings, the Minister has issued a new proposed policy direction offering alternatives to the 30% local shareholding requirement.
The Broad-Based Black Economic Empowerment Act 53 of 2003 and ICT Sector Codes acknowledge the fact that some multinational companies have policies and practices which prevent them from having previously disadvantaged South African shareholders. Even though these multinationals cannot offer shareholding to qualifying South Africans, the Codes make provision for contributions to be recognised through EEIPs instead of a direct sale of an entity's shares.
EEIPs
EEIPs refer to public or private initiatives established to meet the ownership requirements of the B-BBEE framework. These programmes may also focus on investment or other initiatives that contribute to socioeconomic development within the South African economy. This can take the form of investing in infrastructure in rural areas, enterprise and skills development, job creation, as well as research and innovation.
To be eligible for ownership points on the B-BBEE scorecard, such programmes must receive approval from the Minister of Trade and Industry. Once approved, the EEIPs and the associated ownership points cannot be applied to any other element of the multinational's B-BBEE scorecard. The value of the EEIP contributions can be measured against 25% of the value of the multinational's South African operations or may be measured against 4% of the total revenue from its South African operations annually throughout continued measurement.
This new policy sees a shift in Icasa's stance regarding foreign investment. The Minister stated that this new policy was essential to attract investment, particularly in strategic infrastructure, and to drive innovation in the communications industry. It also aims to enhance competition in the information and communications technology sector and to support, enable, and align efforts to achieve the goals set out in the law. Despite the policy, it is clear that the commitment to transformation has remained the goal.
The policy is still open for public comment until 7 July 2025. Only time will tell whether these EEIPs deliver meaningful returns to the B-BBEE beneficiaries, much like the 30% ownership requirement aimed to do, while unlocking greater foreign investment in South Africa's telecommunications sector.
For now, the message from the government seems promising, but will the signal be clear?
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