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South Africa's Strategic Moves to Lower Data Prices Through Policy Reforms and International Investment

Published January 16, 2025
25 days ago

In a strategic move set to transform South Africa's telecommunications landscape, Communications Minister Solly Malatsi has announced plans to introduce comprehensive policy directives by 2025 aimed at reducing the country's notoriously high data prices. This initiative, as reported by Business Day, seeks to encourage increased competition by inviting international investment into the sector, with notable interest from Starlink, Elon Musk's satellite internet venture.





High data costs have been a longstanding barrier in South Africa, limiting access to essential services and economic opportunities, particularly for the underprivileged segments of the population predominantly located in rural areas. Minister Malatsi underscored the urgency of the situation at the AfricaCom Ministerial Summit, emphasizing the need for policy interventions that not only lower prices but also integrate more South Africans into the digital economy.


Kwena Moloto, the spokesperson for Malatsi, outlined that the Department of Communications and Digital Technologies (DCDT) is preparing a policy directive that should be ready for public comment soon, with aspirations to finalize the directive by midyear. This policy will include regulatory reforms focusing on equity ownership requirements, which have historically deterred investors.


One notable aspect of the proposed reforms is the introduction of equity equivalence programs. These programs are designed to streamline the process for foreign companies to invest in the South African telecom market. By investing in local infrastructure, skills development, and enterprise support, these companies can comply with the country’s economic empowerment objectives while fostering a more competitive market environment.


The discussions between DCDT and the Independent Communications Authority of South Africa (Icasa) have been pivotal, especially in advocating for the equity equivalent program for multinational telecommunications companies. This move could potentially open doors for companies like Starlink, which uses advanced low-earth orbiting (LEO) satellites to provide internet access to remote areas. Despite Starlink's presence in 16 African countries, regulatory hurdles have previously deterred its launch in South Africa.


The slow pace in unlocking new spectrum has been a critical point of contention. However, Moloto highlights that more than just spectrum availability is required to reduce prices; a reduction in barriers to entry is essential for encouraging new players in the market. The arrival of entities like Starlink could significantly destabilize the current telecom monopolies, catalyzing a downward shift in data costs.


Moreover, recent regulatory revisions in March 2021, which affect ownership equity laws for telecommunications entities in South Africa, have sparked controversy, impacting plans by companies like Starlink. The stringent requirement for companies with a national footprint now necessitates 30% black ownership, an amendment from the previous 30% ownership by historically disadvantaged groups.


The ongoing uncertainty surrounding these regulations has posed challenges, as reflected in the delayed plans for Starlink’s launch in South Africa, shifting from 2021 to an 'unknown' future date. These are part of the broader issues faced by multinational companies aspiring to enter the South African market, all of which Malatsi's new policies aim to address.


As South Africa gears up to finalize these transformative policies by midyear, the trajectory for a more inclusive, competitive, and economically empowering digital landscape looks promising. The forthcoming changes not only aim to make digital access affordable but also to ensure that investments in the telecom sector yield substantial benefits for the South African populace.


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