South Africa is set to revise its satellite internet ownership rules, a move that could enable foreign companies such as SpaceX to operate in the country without transferring ownership stakes.

The planned changes to South Africa’s Electronic Communications Act directly address the current requirement for foreign-owned communications licensees to sell 30% of equity in their local subsidiaries to historically disadvantaged groups.

This rule has been criticised by satellite internet providers including Starlink.

Communications Minister Solly Malatsi published a policy direction in the government gazette, stating that "equity equivalent" investment programmes in the sector should be recognised towards empowerment objectives.

This adjustment would enable communications companies including Starlink to meet empowerment goals by investing in digital infrastructure and related projects, rather than ceding equity.

SpaceX, Starlink’s parent company, previously wrote to the Independent Communications Authority of South Africa (ICASA), the telecoms regulator, highlighting that local shareholding laws presented a significant barrier to entry.

The company urged the regulator to reconsider the 30% ownership requirement for licensees, according to Reuters.

Malatsi said: "The final policy direction reinforces the need for regulatory parity. It does not favour any entity, bypass the Electronic Communications Act, or weaken transformation.

"This alignment will help attract more investment, support meaningful transformation and improve the lives of South Africans, especially those in rural and underserved communities who still lack access to high-speed internet."

Malatsi initially proposed the policy changes in May, which led to criticism from opposition parties and several lawmakers, who argued that the move would favour foreign companies such as Starlink.

However, Malatsi noted that 90% of public comments received on the draft policy supported the changes, while a minority expressed concerns about the potential dominance of large or foreign operators, according to Reuters.

Satellite technologies using low-Earth orbit constellations could significantly improve internet access for South African users, especially in rural areas where only 1.7% of households have internet access, based on a 2023 survey by the national statistics agency.

If implemented, the revised rules would permit telecoms companies to fulfil empowerment requirements by investing in infrastructure, digital inclusion, or research projects that benefit previously disadvantaged groups, according to a Bloomberg report.

Meanwhile, the parliamentary committee responsible for telecommunications oversight has called for the withdrawal of the directive, which would allow companies such as SpaceX to operate with no ceding ownership.

Malatsi’s announcement has also reportedly led to differing views between the two principal parties in South Africa’s coalition government, the African National Congress (ANC) and the Democratic Alliance.

Malatsi is a member of the Democratic Alliance.

The ANC noted that it is “deeply concerned” by the directive, which would “allow certain operators, notably foreign satellite providers like Starlink, to bypass core transformation obligations”.

The party added: “Weakening these obligations does not modernise the sector; it risks reversing hard-won gains and entrenching foreign dominance in a strategic national industry.”