Malatsi runs out of patience with Icasa on BEE reform

Communications minister Solly Malatsi has run out of patience with Icasa over why the regulator hasn’t yet responded in detail to his policy direction requiring it to review its licensing rules around black economic empowerment.

The minister, a senior member of the DA in the government of national unity, said in a written statement issued by a spokesman on Friday and shared with TechCentral: “I will engage with the regulator, in which [engagement] I expect to be provided with reasons for the lack of sufficient detail on the policy direction.”

He added pointedly: “The law is clear that Icasa must consider the policy direction, and the expectation is that it must happen within reasonable time. The consideration of the policy direction cannot continue in perpetuity.”

The impasse threatens to delay one of the most politically charged regulatory reforms the ICT sector has seen in years. The policy direction, if implemented, is widely expected to clear a path to licensing for Elon Musk’s Starlink satellite broadband service, which has been stalled in South Africa because SpaceX has refused to cede 30% equity to historically disadvantaged groups.

Malatsi first signalled his intention to reform the empowerment rules in October 2024, arguing that the 30% equity requirement was deterring foreign direct investment in the sector. He proposed instead that Icasa recognise equity equivalent investment programmes (EEIPs) – alternative empowerment mechanisms already lawful under the Broad-Based Black Economic Empowerment Act and administered by the department of trade, industry & competition. EEIPs allow multinationals to invest in skills development, enterprise support, local infrastructure or research rather than sell equity to black shareholders.

Political fight

The minister gazetted a draft policy direction in May 2025. The timing proved politically incendiary: the draft was published two days after President Cyril Ramaphosa led a delegation to the White House, where Starlink’s unresolved South African licensing status was discussed with US President Donald Trump. Critics, including parliamentary communications portfolio committee chair Khusela Diko, accused the minister of tailoring the reform to accommodate a single foreign-owned company.

Ramaphosa publicly backed the reforms in parliament the following month, calling EEIPs an “innovative alternative” to equity ownership. Industry support was broad-based: the Internet Service Providers’ Association (Ispa) endorsed the draft, and Malatsi’s department later reported that around 90% of more than 19 000 public submissions supported the direction.

After seven months of consultation, the minister issued the final policy direction in the Government Gazette on 12 December 2025, instructing Icasa to “urgently consider alignment” of its ownership and licensing regulations with the ICT sector code, including full recognition of EEIPs and so-called deemed ownership mechanisms. The direction stopped short of setting a specific deadline for compliance – a gap that now appears to be central to the minister’s frustration.

In the direction, Malatsi was critical of Icasa’s past conduct, accusing the regulator of having “deliberately moved away” from the DTIC’s approved ICT sector code when it amended its ownership regulations in April 2022. The regulator’s current rules, the direction states, are “out of step with national law, the ICT sector code and national policy goals”. The direction also pre-emptively rebutted political critics, stating that the reform will “apply to all licensees in the same way” and is not designed to benefit any single foreign operator.

The direction drew immediate political opposition from the ANC, EFF and MK Party, which variously accused the minister of circumventing transformation objectives and capitulating to foreign pressure. The presidency defended the direction days later, with Ramaphosa’s spokesman, Vincent Magwenya, pointing out that several foreign operators – not just Starlink – were waiting on the outcome.

The telecoms industry broadly welcomed the move, though the Association of Comms & Technology – which represents Vodacom, MTN, Telkom, Cell C, Rain and Liquid Intelligent Technologies – cautioned on implementation, urging the regulator to hold EEIP-based licensees to the same compliance standards as equity-based licensees.

The stand-off is fast becoming one of the most visible policy flashpoints inside the government of national unity. Malatsi’s direction has pitted the DA’s flagship ICT reform against the ANC’s transformation orthodoxy, with MK and the EFF treating it as a rallying point against what they cast as foreign capture of the state. A prolonged Icasa silence – or an outright rejection – would hand those critics a political victory and risk stalling a reform the presidency has publicly endorsed, with knock-on consequences for foreign direct investment signals, South Africa’s already fraught relationship with Washington, and the credibility of the GNU’s claim to speak with one voice on economic policy.

‘Lack of sufficient detail’

More than four months on, Icasa allegedly has yet to publish any substantive response. Under the Electronic Communications Act, the regulator is obliged to consider ministerial policy directions within a reasonable time while retaining regulatory independence over how it gives effect to them.

Malatsi’s public demand that Icasa explain the “lack of sufficient detail” in its current position is the sharpest intervention yet – and raises the prospect of further delays for the foreign operators, including Starlink, that have been awaiting regulatory clarity.

TechCentral has asked Icasa for comment.  – (c) 2026 NewsCentral Media