Elon Musk’s SpaceX is formally petitioning the South African government to consider an alternative to the country’s Black Economic Empowerment (B-EE) ownership laws, which are currently a barrier to the launch of its Starlink satellite internet service in Africa’s most developed economy.
In a letter submitted to the government, SpaceX has requested that the authorities permit it to operate through an “equity-equivalent program.” This would serve as a substitute for the existing legal requirement that companies in the Information and Communications Technology (ICT) sector must have at least 30% Black ownership.
Instead of ceding an equity stake, SpaceX has pledged a substantial direct investment into the country’s digital infrastructure. Specifically, the company has offered to provide 5,000 rural schools with free high-speed internet service and connect 2.4 million students at no cost. This proposal aims to directly address one of South Africa’s most pressing challenges: the digital divide.
SpaceX argues that making such equity-equivalent programs a standard option for all operators would benefit the entire industry:
Equity equivalent investment programs will provide much-needed regulatory certainty and foster investment in infrastructure. Uniform empowerment regulation will motivate both current and prospective operators to expand their business activities and network reach.
This move is not happening in a vacuum. South Africa’s own Department of Communications and Digital Technologies has already asked the industry regulator to explore alternatives that would allow telecommunications companies to fulfill their empowerment obligations by investing in critical projects like infrastructure development, support for local businesses, digital inclusion initiatives, or research and development.
This type of exemption is already a standard feature in several other South African industries. A notable precedent was set in 2019 when major car manufacturers, including BMW AG, Ford Motor Co., and Toyota Motor Corp., were allowed to establish a fund to bring disenfranchised groups into the automotive sector as an alternative to direct ownership changes.
On its South Africa website, Starlink emphasized its position:
Starlink is not seeking any type of special treatment, as these changes would apply to all current and future potential operators.
The Black Economic Empowerment rules were established after the end of apartheid in 1994. They were designed as a corrective measure to address the profound economic inequalities created by the previous White-minority government, which systematically excluded Black people from participating in the formal economy. Elon Musk, who was born in Pretoria, South Africa, has been a vocal and persistent critic of these laws, which he has publicly described as “openly racist.”
The outcome of this petition could be transformative for South Africa. Starlink’s technology, which utilizes a vast constellation of low-Earth orbit satellites, represents a potential game-changer for a country where internet access remains expensive and unreliable, particularly outside of urban centers.
A 2023 survey by the nation’s statistics agency revealed a stark reality: only 1.7% of rural households have access to the Internet. Starlink’s service could rapidly bridge this gap, aligning with the goals of South Africa’s National Development Plan, which targets 100% easy and affordable broadband access for the entire population by 2030.
The Department of Communications and Digital Technologies has confirmed receipt of SpaceX’s submission but has not commented further. The initial report on the letter was published by the Cape Town-based news website News24. The decision now rests with South African regulators, who must weigh the goals of historical economic redress against the potential for a massive leap forward in the nation’s digital connectivity.
