Minister Solly Malatsi publishes policy direction on equity equivalent investment programmes in the ICT sector

In line with the Government of National Unity’s mission to maximize prospects of attracting investments through regulatory reforms, the Minister of Communications and Digital Technologies, Solly Malatsi, has today gazetted a policy direction on the role of equity equivalent investment programmes (EEIPs) in the ICT sector as a mechanism to accelerate broadband access.

Digital infrastructure and access to the internet opens a world of opportunity — from applying for jobs and studying, to accessing government services or even starting a business. All of this becomes possible when you are connected.

The policy direction seeks to provide the much-needed policy certainty to attract investment into the Information and Communication Technologies (ICT) sector, and specifically with regards to licensing for broadcasters, internet service providers, mobile networks, or fixed and mobile networks.

Currently, the rules around who can acquire a licence to provide electronic communications services or to operate an electronic communications network, require a minimum of 30% shares to be in the hands of historically disadvantaged individuals. These regulations do not currently allow companies that can contribute to South Africa’s transformation goals in ways other than traditional ownership, to qualify for individual licences under the Electronic Communications Act (ECA), whether or not they are big international companies that do not usually sell shares to local partners.

EEIPs, provided for under the Broad-Based Black Economic Empowerment Act (Act 53 of 2003) and the ICT Sector Code, allow qualifying multinationals to meet empowerment obligations through alternatives to 30% ownership — such as investing in local suppliers, enterprise and skills development, job creation, infrastructure support, research and innovation, digital inclusion initiatives, and funding for SMMEs. Despite the legal standing of the ICT Sector Code under the BBBEE Act, ICASA’s Ownership Regulations do not fully reflect its provisions — particularly regarding deemed ownership and EEIPs.

Therefore, this policy direction aims to ensure consistency, unlock investment, and give practical effect to the ICT Sector Code in line with national development goals, including transformation.

The draft policy direction, once finalised, will enable the Minister to direct ICASA to:

• Align its Ownership Regulations applicable to licensing under section 5 of the ECA with the full scope of the ICT Sector Code, including recognition of EEIPs and deemed ownership mechanisms;
• Apply the same BBBEE criteria to the ICT sector ensuring alignment with national priorities, transformation objectives, and investment attraction; and
• Engage with DCDT, DTIC and the ICT Sector Council to define acceptable EEIP contributions in the ICT context.

Crucially, the direction makes it clear that:

• New market entrants — including those offering new or disruptive technologies — will not be exempt from transformation obligations. Even if companies are not rolling out large-scale infrastructure, they will be required to make commitments that are substantive and clearly aligned with South Africa’s socio-economic development goals.
• Different technologies may have different rollout models, but transformation is non-negotiable — all players must contribute meaningfully to equity, skills development, and economic inclusion.
• ICASA’s regulations may continue to require 30% equity ownership by historically disadvantaged individuals but must also permit commitments envisaged by the ICT Sector Code as valid conditions for applications for individual licenses.

All interested parties are invited to submit comments on the draft policy direction, within 30 days of the publication in the government gazette, which will be taken into account in finalising the policy direction.

Enquiries:
Mr Kwena Moloto
Ministry Spokesperson
Cell: +27 83 269 3189
E-mail: kmoloto@dcdt.gov.za

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