Starlink challenges South African regulations as it hits BEE roadblocks

Ahmed Dhupli: Associate, Dispute Resolution Practice Group, PH Attorneys

This clash between a large international enterprise and the South African government highlights the complexities of introducing foreign investment into a well-established Black Economic Empowerment (BEE) regulatory environment. What follows below is a brief observation of the latest developments regarding Starlink’s proposed entry into South Africa as a service provider and foreign investor.

What is Icasa?

Icasa is the official regulator of the South African communications, broadcasting and postal services sectors and is tasked with inter alia developing regulations and issuing licences to telecommunications and broadcasting service providers.

These rules and regulations are aimed at ensuring that service providers comply with the country's legal framework, contribute to the local economy, and meet specific standards for consumer protection and service quality. The primary aim of Icasa is to ensure that all South Africans have access to affordable basic communication.

Upon Starlink’s intended expansion to the African continent, it has pushed back against Icasa and its requirements for issuing licences to telecommunications service providers.

Starlink has faced little issue with entering other southern African countries as it intends to contribute to providing internet connectivity to rural areas.

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Applicability of ECA

Section 9 of the ECA deals with the application for and granting of individual licences and directs that the percentage of equity ownership that is required to be held by persons from historically disadvantaged groups is 30% or such other conditions or higher percentage as may be prescribed.

The licences are required in South Africa to provide services directly to end users.

The crux of Starlink’s argument is that most foreign satellite operators have certain policies in place that do not allow their shareholding to be diluted with local shareholders, which creates a loss of interest in South Africa as a target market.

Starlink further argues that providing an alternative to the 30% local shareholding requirement, such as equity equivalent programmes, will attract foreign investment in the country.

Equity equivalent programmes as an alternative option have been supported by the communications minister Solly Malatsi. However, this is not an official stance that Icasa has endorsed, and this will still have to undergo meaningful consideration.

The balancing act

Starlink has vocalised the fact that should Icasa persist with the 30% ownership requirement as envisaged in the ECA, international investment in South Africa will certainly be negatively impacted.

In the fast-paced, tech-reliant world, it is tricky to balance the policies of foreign investors with the requirements of BEE.

On the one hand, the South African economy would certainly benefit from foreign investors seeking to improve access to affordable internet for its citizens. However, on the other hand, South Africa intends to apply its BEE policies to achieve positive transformation, a longstanding and crucial goal of a democratic South Africa.

One could perhaps argue that providing those living in rural areas with internet access directly empowers disadvantaged individuals which achieve the same goal which BEE legislation aims to achieve.

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It can also be argued that if Icasa relaxes its requirements for Starlink, a precedent of sorts may be established allowing other international enterprises (including those already active in the local market) to also request such an indulgence.

This entire battle regarding Starlink’s entry into South Africa also raises the issue of competition in the country’s telecommunications sector, which will without a doubt be altered upon Starlink’s introduction into the market.

It has been revealed that Icasa plans to develop a “transparent regulatory framework with clear rules to establish regulatory certainty for potential investors”.

Icasa held public hearings from 5-7 February 2025 (for which it received over 50 written submissions from interested parties) with a focus on a proposed new licensing framework regarding satellite services.

SpaceX, Starlink’s parent company, who was afforded a timeslot to make oral recommendations, withdrew from participating in these public hearings; however, its written representations have not been withdrawn.

This demonstrates a clear intent by Icasa to, at the very least, attempt to find a solution to Starlink’s concerns.

Thabisa Faye, chairperson of the Satellite Committee, has indicated that “the committee will now carefully review all oral and written submissions, which all form a critical part in assisting the Authority in developing a findings document. Icasa remains committed to promoting innovation while ensuring regulatory measures that support long-term sustainability and inclusivity.”

Could we soon see a potential shift towards an investor-centred approach adopted by the South African government?

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