Elon Musk’s Starlink Backs BEE Equity Equivalents, Not 30% Ownership

Elon Musk’s SpaceX’s satellite internet venture, Starlink, has formally endorsed South Africa’s proposed Broad-Based Black Economic Empowerment (B-BBEE) policy reforms, advocating for Equity Equivalent Investment Programmes (EEIPs) as an alternative to the mandatory 30% black ownership requirement for telecom license holders.

In an exclusive written response obtained by TechFinancials, Ryan Goodnight, Senior Director of Starlink Market Access, stated: “SpaceX commends the Department for this timely policy direction and welcomes the opportunity to discuss our response with the Department at your earliest convenience.”

The statement follows SpaceX’s submission to the Independent Communications Authority of South Africa (ICASA) regarding its Proposed Policy Direction on B-BBEE alignment in the ICT sector, published on 23 May 2025.

The policy seeks to harmonise ICASA’s Ownership Regulations with the ICT Sector Code, which permits EEIPs, a model that allows foreign companies to contribute to economic transformation without relinquishing direct equity.

Why Starlink supports Equity Equivalents over 30% ownership

1. Regulatory clarity and foreign investment

Starlink argues that misalignment between ICASA’s regulations and the ICT Sector Code creates uncertainty for investors.

Currently, ICASA requires telecom license applicants to:

• Be South African-registered entities (SA Requirement).

• Achieve at least Level 4 B-BBEE contributor status (BBBEE Requirement).

• Have 30% equity owned by historically disadvantaged individuals (Ownership Requirement).

However, the ICT Sector Code, governed by the B-BBEE Act, recognises EEIPs as an alternative for multinational corporations that cannot transfer ownership.

Goodnight emphasized: “Harmonising the regulations with the ICT Sector Code will provide clarity regarding
the obligations that apply to both emerging market participants and existing operators.

“This harmonization encompasses the acknowledgment of equity equivalent investment programmes, which play a vital role in incentivising investment in South Africa by international operators, while also recognising transactions and structures that have shown success under the ICT Sector Code.”

The company added that for clarity – SpaceX supports (and does not seek any amendments to) the South Africa requirement or the BBBEE requirement.

2. Global precedent for Equity Equivalents

EEIPs are not new in South Africa.

Major firms like Microsoft, Google, and Cisco have previously used this model to comply with B-BBEE without diluting ownership.

For more read: Equity Equivalent: How Amazon, IBM, Microsoft Comply With B-BBEE

These programmes typically fund:

• Skills development (training, scholarships).

• Enterprise growth (supporting black-owned SMEs).

• Digital inclusion initiatives (low-cost internet access).

Starlink contends that this approach is more practical for global operators, as forcing foreign firms to sell 30% equity could deter investment in critical broadband infrastructure.

“The Policy Direction appropriately directs ICASA to urgently consider alignment of its Ownership Regulations with the ICT Sector Code,” Goodnight contends in a written response. “This alignment is both legally required and practically necessary to achieve South Africa’s broadband and empowerment objectives.

“This alignment, and in particular the recognition of equity equivalent investment programmes, will provide much-needed regulatory certainty and foster investment in infrastructure essential for bridging the digital divide.

“This approach is consistent with the global nature of multinational corporations’ operations and provides an avenue for alternative ways to impact South Africa’s socio-economic development.”

3. Economic Benefits of Broadband Expansion

The policy direction cites World Bank research showing that a 10% increase in broadband penetration correlates with a 1.21% GDP growth in middle-income countries like South Africa.

Despite this, South Africa ranks:

• 52nd globally for mobile internet speeds.

• 100th for fixed broadband speeds.

Starlink’s low-orbit satellite technology could help close this gap, particularly in rural and underserved areas, where traditional ISPs struggle to deploy infrastructure.

Legal and political controversy

EFF opposition and sovereignty concerns

The Economic Freedom Fighters (EFF) have vowed to challenge the policy in court, arguing that exemptions for Starlink undermine B-BBEE’s transformative goals.

In a statement issued in May, the EFF said: “Granting special exemptions to billionaires like Elon Musk compromises South Africa’s sovereignty and economic empowerment agenda.”

Legal basis for Equity Equivalents

Starlink’s submission highlights that:

• The Electronic Communications Act (ECA) allows ICASA to impose alternative empowerment mechanisms (Section 9(2)(b)).

• The B-BBEE Act (Section 10) mandates that sector codes (like the ICT Sector Code) take precedence over conflicting regulations.

• ICASA’s strict 30% rule may contravene these laws by ignoring EEIPs.

What This Means for South Africa’s Digital Future

1. Faster Internet Rollout

If approved, the policy could accelerate Starlink’s entry into South Africa, providing:

• Affordable satellite broadband in remote regions.

• Competition to dominant ISPs like MTN, Vodacom, and Telkom.

• Could allow other satellite operators across the world to set up shop in South Africa.

2. Balancing Empowerment and Investment

The debate reflects a broader tension in South Africa’s policy:

• Strict ownership rules may deter foreign investors.

• Flexible EEIPs could attract capital while still advancing B-BBEE goals.

3. Potential for Legal Challenges

If ICASA adopts the policy, the EFF or other groups may seek judicial review, arguing that it weakens transformation efforts.

Starlink’s push for regulatory alignment emphasises the challenges of balancing economic empowerment with foreign investment.

The proposed policy direction could:

• Unlock billions in broadband investment.

• Expand internet access to underserved communities.

• Set a precedent for how South Africa regulates global tech firms.

As the government finalises its decision, the outcome will shape not just Starlink’s future in South Africa—but the entire digital transformation of the country.

Also read: GUGU LOURIE: Ditch BEE red tape to boost jobs and growth

All rules have their exceptions — in other words, it is the exception that proves the rule. This basic principle explains why SA’s rigid insistence on enforcing BEE compliance for Starlink amounts to economic self-sabotage.

While Elon Musk’s dismissal of BEE as racial bias is misguided, the government’s refusal to grant operational flexibility to a transformative digital provider ignores SA’s deepening crisis, which includes stagnant GDP growth, mass unemployment and more than half of the population living in poverty.