Communications minister Solly Malatsi has backed a proposal to extend South Africa’s real estate investment trust (Reit) regime to digital infrastructure – a reform the sector has long argued could unlock billions of rand in capital for fibre networks, mobile towers and data centres.
“While we work on stabilising the fundamentals, we are also continuing to seek innovative ways to stimulate investment in the sector,” Malatsi said during his budget vote speech this week.
“Allowing companies that own digital infrastructure to participate in the Reit regime could unlock long-term capital, attract foreign direct investment and provide a much-needed injection into the ICT sector. The sector has already engaged extensively with national treasury and Sars on this matter.”
Malatsi said his department supports extending section 25BB of the Income Tax Act – which governs South Africa’s Reit regime – to include digital infrastructure. He did not indicate whether treasury, which holds the pen on tax legislation, is ready to move.
Section 25BB is the cornerstone of South Africa’s listed-property regime. It gives qualifying Reits favourable tax treatment, most notably by allowing them to deduct distributions to shareholders, effectively shifting the tax burden from the company to the investor. The structure has underpinned the growth of the JSE’s listed property sector, which today includes the likes of Growthpoint, Redefine and Resilient.
Drafting challenge
To qualify, a company must derive at least 75% of its gross income from rental of immovable property – a definition that fits shopping centres and office blocks more neatly than co-location data centres or fibre networks.
That is the central drafting challenge for any extension of the regime: deciding which digital infrastructure revenue streams count as “rental from immovable property”, and which look more like service revenue. Tower co-location fees and data centre rack rentals arguably qualify; power, cooling, cross-connects and managed services do not.
Read: Data centre ‘critical infrastructure’ tag welcomed, but detail still thin
The move follows similar initiatives elsewhere. The US extended its Reit regime to cover communications infrastructure in the early 2010s, with the likes of American Tower Corporation, Crown Castle, SBA Communications and Equinix subsequently converting or listing as Reits. Today, these companies dominate the global digital infrastructure capital stack. India followed with infrastructure investment trusts, which have been used to monetise fibre and tower portfolios. Several European jurisdictions have moved in the same direction.
A local Reit regime tailored to digital infrastructure would, in principle, give these companies a route to list on the JSE and tap domestic pension and insurance capital. It would also give foreign investors a familiar vehicle through which to deploy money into South African assets.
The JSE’s listings requirements, which sit alongside the tax regime, would also need to be aligned. The exchange’s existing Reit rules are written around traditional property, not digital infrastructure.
There are also competition concerns. Tower and fibre consolidation under Reit structures has had mixed outcomes in mature markets, with mobile operators in the US in particular complaining about the rents extracted by dominant tower companies.
Read: South Africa puts data centres on par with energy, ports in big policy shift
The minister’s backing aligns with government’s broader repositioning of digital infrastructure as central to South Africa’s economic prosperity. In his February budget speech, finance minister Enoch Godongwana placed digital infrastructure on par with electricity, ports and transport networks – a policy shift aimed at attracting investment from global hyperscalers racing to build cloud computing capacity.
Godongwana said treasury would this year “explore options to help data centres and related infrastructure to expand these investments in South Africa and solidify our role as a regional hub for these technologies”.
The move was welcomed by industry, but questions about implementation were raised – particularly around the energy required to power data centres at scale.
“Key to ongoing investment in the sector is a frictionless renewable energy wheeling framework between Eskom, municipalities and data centre operators. This would unlock huge investment in new renewable energy production by the private sector and allow Eskom to invest significantly in the transmission infrastructure required to expand the national grid,” said Teraco CEO Jan Hnizdo. – © 2026 NewsCentral Media
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