Good news for Starlink and smartphone prices in South Africa

South African Minister of Communications and Digital Technologies Solly Malatsi has a two-part plan to bridge the country’s digital divide, which could be good news for international providers like SpaceX’s Starlink.

In a column published in the Sunday Times, Malatsi said enabling both domestic and international businesses to offer affordable broadband in South Africa and reducing the cost of smart devices will be critical to achieving his goals.

Regarding the former, the minister said he would issue a policy directive on the role of equity equivalence programmes (EEPs) in the ICT sector.

“First, we need to make it easier for businesses, both domestic and international, to offer affordable, fast, reliable broadband to every South African,” he said.

“That is why one of the key targets for my department in the government’s Medium-Term Development Plan is a decision to allow businesses to contribute to empowerment through EEPs.”

Malatsi added that he hopes South Africa’s communications regulator, the Independent Communications Authority of South Africa (Icasa), will seize the opportunity.

He explained that EEPs allow multinational firms to invest directly in initiatives that empower previously disadvantaged people and businesses.

This could include connecting schools, clinics, and other government services, skills training for young people, and business development opportunities for small enterprises, among others.

The move would ultimately help clear the barriers that have prevented SpaceX’s low-earth orbit satellite service, Starlink, from launching locally.

The telecoms industry has been stuck in limbo for nearly four years after Icasa published its new local ownership regulations in March 2021.

The provisions require telecom companies operating national services to be at least 30% black-owned rather than owned by historically disadvantaged groups. However, Icasa suspended the coming into operation of these updated regulations.

Malatsi first said he would instruct Icasa to develop EEPs in January 2025. He hoped the move would create a more dynamic market conducive to increased competition, improved services, accessible prices, and expanded Internet access.

The minister’s spokesperson, Kwena Moloto, specifically referred to Starlink when discussing these programmes.

“One of the most frequently discussed potential entrants is Starlink, a global satellite internet provider. Allowing such new players into the market will increase competition, enhance service options and drive down data prices,” said Moloto.

The second phase of Malatsi’s plan is to reduce the cost of smart devices in South Africa.

“The second part of my plan is to bring down the cost of smart devices capable of utilising high-speed internet connections,” said Malatsi.

The minister said his department is working with the World Bank and the Global System for Mobile Communications Association (GSMA) to determine how to proceed.

He said the organisations will conduct a study into lowering prices over the course of the current year.

The minister recently secured a win in this regard. Finance minister Enoch Godongwana, in his 2025 Budget Speech, revealed that South Africa will lift the 9% luxury goods tax on smartphone imports under R2,500 from 1 April 2025.

The luxury tax or ad valorem is a duty applied to products deemed to be luxury items, including motor vehicles, electronic equipment, and cosmetics. A flat rate of 9% is applied to technology products, except for some computer hardware.

Malatsi had advocated for removing ad valorem on smartphones since his first days in office in mid-2024.

“One of my obsessions is looking at the declassification of smart devices as luxury items because they carry an additional tax,” he told MyBroadband in an interview.