Is Starlink set for blast-off with BEE policy shift?

When South African President Cyril Ramaphosa met with Elon Musk in September last year and the topic of the satellite internet operator Starlink’s disputed operating licence came up, Ramaphosa tried to explain the country’s BEE rules. Musk reportedly interrupted him and said simply: “Change the law.” On Friday, South Africa set about doing just that. 

The proposed legal change took place only days after the tense meeting between Ramaphosa and US President Donald Trump, and it follows press reports that one of the concessions South Africa would make when the delegations met was to find a “workaround” to allow Starlink to operate in the country.

The speed with which the proposed change has taken place is surely indicative of South Africa’s desire to improve its fraught relations with the US and the Trump administration, and to signal to the world that the country is not averse to foreign investment. 

But the change is not entirely done and dusted, because technically the licensing organisation is not directly administered by government itself, but by a government agency, the Independent Communications Authority of South Africa (Icasa). Icasa is nominally quasi-independent and has previously strictly enforced the BEE requirement that 30% of licence holders’ equity must be held by Black South Africans. 

What happened on Friday is that communications and digital technologies minister Solly Malatsi gazetted a very short, three-page “proposed policy direction” document for public comment. 

All the document does, essentially, is insist that Icasa harmonise BEE legislation with the Electronic Communications Act and the information and communication technology sector code. By doing so, Icasa will effectively be allowing an alternative to the 30% equity requirement, with so-called equity equivalents designed to allow all of the big international tech companies to operate in South Africa without selling a slice of their equity. 

The document does not specify what those equity equivalents should be, or their extent, but historically they have constituted building infrastructure or assisting small-and medium-sized Black-owned businesses. 

The fact that Icasa will still have to determine these equivalents introduces an element of doubt into the changes, but the thrust of the change of government policy should be clear to Icasa, despite the fact that it has resisted these changes for years now. The result has been that Starlink is currently licensed in almost half of the countries in Africa, but not in the continent’s largest data market. 

The document does argue that World Bank research shows, on average, every 10% increase in broadband penetration results in a 1.12% increase in GDP growth in middle-income countries. “Broadband access makes it easier for people to start businesses, grow businesses, seek employment, work remotely, and market goods and services. Giving millions of South Africans access to broadband would therefore constitute one of the biggest empowerment programmes the South African government has ever undertaken,” the document says, somewhat hyperbolically.

Ramaphosa said after his meeting with Trump that the changes to the rules were not discussed with Starlink owner Elon Musk, even though he attended the fractious meeting. So it is not known at this point what Musk’s position is on the changes, and whether the “workaround” will satisfy him.

In the past, Musk has been bitter about the BEE stipulations, which he describes as “racist”. Only last week, he said: “I’m now in this absurd situation where I was born in South Africa but cannot get a licence to operate in South Africa because I’m not black”.

Increased competition

How much this change is a specific concession to Musk, who is now part of the Trump administration, is open to speculation. But the legislative changes will not apply only to Starlink, and will be available to other operators as they become available.

Amazon’s Project Kuiper, delivering global broadband internet through a constellation of more than 3,200 low earth orbit satellites, will also be operational within the next few years. But its initiative massively trails Starlink, which already has more than 7,000 satellites operational.

Particularly after its thumping in the Oval Office on Wednesday, the EFF appears to have hardened its position against the service. The party has posted on X on Thursday that it will oppose Starlink “as it is owned by white-genocide peddler Elon Musk and poses a Security Threat to South Africa!” 

But trade union federation Cosatu has recently come out in favour of equity equivalents, with its national spokesperson Zanele Sabela saying on Newzroom Afrika that concrete steps must now be taken to elevate the bilateral ties, and Starlink could be one of the building blocks.

“There are things we can start to talk about … so that we can get this monkey off our back in terms of the fires that Elon has been stoking,” she said. 

The ANC has in the past insisted on the 30% BEE equity ownership requirement, but presumably it is now on board with the “getting the monkey off the back” philosophy, since Malatsi, one of the DA ministers, is unlikely to have acted without cabinet approval.

The organisations with the most to lose should Starlink be licensed will be the cellphone network operators, which currently earn very high margins on digital bandwidth. They have argued that it would be unfair for Starlink to bypass BEE requirements, which they were required to adhere to in the past at enormous expense. The cellphone companies also argue they have spent billions on infrastructure precisely to provide data bandwidth across much of the country.

The possibility that licensing Starlink would attract legal opposition from the cellphone companies is one of the reasons why South Africa has adopted the cautious, fastidiously legal route in trying to provide Starlink a licensing opportunity. 

The opposition of the cell network operators might still stymie the whole process, though they are hardly providing a cheap service in South Africa’s rural areas, precisely because it’s so expensive to do so. If nothing else, consumers are likely to welcome the competition.

_{Top image: Elon Musk (Chip Somodevilla/Getty Images) / Currency collage.}