Latest news with #DepartmentofCommunicationsandDigitalTechnologies
The South African
a day ago
- Business
- The South African
POLL: Should Starlink operate in SA, without abiding by BEE laws?
Elon Musk's Starlink is reportedly set to invest over R2 billion into South Africa's economy, as a means of 'working around' Black Economic Empowerment (BEE) policies, which requires a stake in local shareholding for foreign investors. Instead, the internet satellite service could offer equity equivalent investment programmes (EEIPs), as recently gazetted by the Department of Communications and Digital Technologies. Elon initially slammed the transformative legislation as a 'racist law', as he was 'not black'. According to reports, Starlink, which falls under SpaceX, is looking to invest over R2 billion in South Africa as part of its prospective deal to operate in the country. Business Day reports that the company would finance infrastructure to support the Southern African Development Community (SADC), which is made up of 16 countries. The move is thought to be a way to 'work around' local BEE policies, which require 30% local shareholding for foreign investors. Is Elon Musk's Starlink getting the greenlight to operate in SA? This follows a new policy direction offering 'alternatives' to BEE. Images via X: @starlink In May, Minister of Communications and Digital Technologies Solly Malatsi gazetted a policy direction for his department on EEIPs, which are considered 'alternatives' to transformative legislation. Without mentioning Starlink, the minister claimed that the policy would 'attract investment,' specifically in operating licensing. The minister revealed that current legislation for foreign investments 'did not allow companies to contribute to transformation goals in ways other than traditional ownership'. The news that Starlink could operate in South Africa, and potentially 'bypass' BEE requirements, has seen mixed reactions on social media. @PrayerTmos: 'Elon Musk tried to tank the South African economy, and create boiling racial tensions, and never apologized. It means he still plans to continue with the sabotage of SA, and with such communications business, espionage and spying will become easier.' @XnBoeremeisie: 'With a 75%+ debt-to-GDP ratio, the government better accept Elon's investment offer!' @Squirrel1980021: 'We have a BEE policy and is not it going away. The Chinese and Russians will comply.' @stallionheat02: 'Starlink is a game changer for rural and underserved areas. Just imagine having internet everywhere in the world with one subscription for less than 1K. Bring Starlink, and let those who want to use it use it'. Let us know by leaving a comment below, or send a WhatsApp to 060 011 021 1 . Subscribe to The South African website's newsletters and follow us on WhatsApp , Facebook , X, and Bluesky for the latest news.
Daily Maverick
23-06-2025
- Business
- Daily Maverick
Swiftnet sells, Telkom swells: one deal, big dividends — for now
Telkom dazzled investors with its financial results recently, but a deeper dive reveals that the sale of the Swiftnet tower infrastructure business – once considered central to Telkom's strategy – provided the windfall that lit up the numbers. But strip out Swiftnet, and the glow fades fast. The Department of Communications and Digital Technologies (DCDT) congratulated Telkom on its 'phenomenal' results, with Minister Solly Malatsi hailing it as 'a key enabler of South Africa's digital future' in a statement on 10 June. Unlike traditional SOEs like Eskom or Transnet, Telkom is listed on the JSE and not governed under Schedule 2 of the Public Finance Management Act – but with 54.5% of its shares held by state-linked entities, it behaves more like a public-interest asset than a private firm. Despite these apparently strong financials, all of these indicators are positive as a result of the sale of a core business within Telkom's holding – Swiftnet, which owns all of the company's mast and tower business. The numbers vs the narrative Telkom's FY2025 performance was strong across all headline metrics: group revenue rose 3.3% to R43.9-billion, adjusted EBITDA jumped 25.1% to R11.8-billion and free cash flow surged to R2.78-billion – a 555% increase on the prior year, almost unbelievable on paper. The company declared dividends for the first time in four years, totalling R1.3-billion. Every number on the switchboard appears to be green, with the state emerging as a major beneficiary: a R540-million dividend windfall flowed into government coffers just in time to help buffer the fiscus. Still, one question remains on the line: are these numbers the result of strategic depth, or a carefully choreographed series of asset disposals? A towering turnaround At first glance, the turnaround reads like a textbook recovery play: streamlining, divestiture, energy efficiency, capital discipline. However, a detailed analysis of the financials shows that nearly all the key indicators of Telkom's turnaround hinge on a single major action: the sale of Swiftnet, Telkom's mast and tower managed more than 4,000 high sites – many in remote areas – serving as the physical spine of Telkom's mobile and fixed wireless networks. Its sale means Telkom will now pay to access the infrastructure it once owned, with long-term lease costs baked into future operations. Swiftnet's disposal generated R6.6-billion in proceeds, cut net debt to almost half of what it was, bringing it to R7.48-billion, and unlocked the funds for dividend reinstatement. The buyer was a consortium led by Actis, alongside Royal Bafokeng Holdings and the Mineworkers Investment Company. Not insignificantly, the R4.4-billion net gain on Swiftnet's sale also inflated reported profit, pushing EBITDA margins higher. Free cash flow surged by 555% – impressive, yes, but primarily due to this windfall, a reduction in capex and tightened cost controls. That eye-watering number highlights the real concern: Telkom's FY2025 turnaround looks like a one-trick pony, unless the company intends to keep selling off core infrastructure. Telkom brought back dividends this year, promising to pay out between 30% and 40% of its free cash flow to shareholders. But in 2025 it went even higher, paying out 48%. That extra payout was made possible by the cash it earned from selling Swiftnet, which gave the company a big financial boost. Notably, Telkom hadn't paid dividends since 2021, citing pandemic pressures, margin decline and capital requirements. The 2025 payout signals a strategic shift, though not necessarily a structural one. 'Without Swiftnet's R4.4-billion disposal gain, Telkom's core profit story looks significantly more modest – and its future operating costs are now structurally higher,' the company noted in its investor release. Divestment-driven growth The Swiftnet deal transferred control of income-generating infrastructure to an external operator. Telkom now leases back some of these same towers at a cost. While the short-term capital unlocked helped reduce debt and deliver dividends, it baked in long-term lease liabilities. Selling vs leasing towers – a case study in strategic trade-offs MTN's 2021 sale of more than 5,700 towers to IHS Towers unlocked immediate capital and was initially hailed as a strategic move to streamline its balance sheet. However, the deal later attracted criticism as leaseback costs began to rise, eroding the expected financial benefit. More significantly, MTN ceded control over key passive infrastructure, which reportedly led to delays in site upgrades, reduced agility in rural network expansion and strained relationships with the tower operator over access and maintenance. The long-term implications of relinquishing infrastructure ownership became a cautionary tale in the telecoms industry – one that Telkom may now be echoing with the Swiftnet sale. What this means for you Telkom's big numbers might look great for now, but they came from selling key parts of the business, like its cellphone towers. That helped pay shareholders, but it also means Telkom now has to rent back the infrastructure it once owned. If this cuts into future network investment, you could see slower upgrades, patchy coverage in rural areas, or even higher prices. If you're a Telkom customer, it's fair to ask: will I get less for more? Will my signal suffer? Or should I start looking at other networks? Whether this will, in fact, be the case will likely only be seen by Telkom's performance and service over the current financial year. On the spectrum – litigation and market dominance In 2021-22, Telkom challenged Icasa's high-demand spectrum auction, claiming the process favoured comparative incumbents such as Vodacom and MTN. It cited ignored roaming agreements (such as Vodacom-Rain) and obsolete competition models. 'Icasa failed to conduct a new competition assessment and relied on outdated frameworks,' Telkom argued in its court application filed with the North Gauteng High Court at the time. While the litigation was eventually withdrawn, the company's underlying point may now work against it. With debt slashed and cash freed up, Telkom is better placed than ever to bid aggressively, potentially replicating the very dominance it previously challenged. Paper tiger or infrastructure backbone? Telkom's 2025 performance is no doubt impressive, but many of its gains are the result of concretely one-off, non-repeatable actions. The 2025 financial year gave Telkom a fiscal breather. The current financial year will determine whether that space becomes structural headroom, or whether the company suffers in delivery of key services due to the sales it has made. DM
IOL News
28-05-2025
- Business
- IOL News
Business rescue practitioners prepare to file court papers to exit Post Office
Business rescue practitioners say they have informed the Department of Communications and Digital Technologies of the pending court application to terminate the business rescue at the South African Post Office. Image: Independent Newspapers Archives The business rescue practitioners are preparing to file papers with the High Court as part of the exit strategy from the South African Post Office (SAPO). This was revealed by co-business rescue practitioner Anoosh Roopal, along with his co-business rescue practitioner Juanito Damons, who briefed the Communications and Digital Technologies Portfolio Committee on Wednesday. 'We are in discussions with the department around the business rescue having to end and business rescue practitioners having to leave,' Roopal said. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ SAPO was placed under provisional liquidation in February 2023 and later on business rescue in July 2023 after the board of directors was dismissed two months earlier. Upon their appointment, Roopal and Damons developed a business rescue plan that was approved by the creditors and then assumed management control of the business. Roopal said they were now in discussions with the Department of Communications and Digital Technologies and preparing a court application to terminate the business rescue process. This takes place as the financial plan to ensure SAPO remained a going concern was being finalised amid moves to secure payment of R509 million of statutory and payroll creditors owed to the South African Revenue Service (SARS) and medical aid schemes. 'Despite the R3.8 billion not being provided, the business rescue practitioners and the department are in discussions to develop an alternative plan to pay the remaining 18-cent creditors,' he said. Damons told the committee that they had already consulted their attorneys about the pending application, and the department was aware that they were preparing an application. 'We will ask the court to terminate the business rescue, and we would also ask for consent so that Anoosh and I can file with the Companies and Intellectual Property Commission a notice of substantial implementation.' Damons said the application comes at a good time, as there was a specialised court in Gauteng that dealt with insolvency and business restructuring. 'To get to that court, it will take us about three to four weeks if we go on a semi-urgent basis, for example,' he said. Court papers will be drafted next week, and engagements with the department and the unions will take place to make sure all are on the same wavelength. Damons said that when a business enters business rescue, it has to show that the company does not have the financial ability to cover its operational expenses when they become due and payable. 'At SAPO, at least that does not give us sleepless nights, we have enough funding from June and the ensuing six months. SAPO will be able to pay its operational expenses next six months.' Roopal said SAPO now has a turnaround strategy in line with its fulfillment of the strategic objectives at the entity. 'What we did was the turnaround strategy. We are quite comfortable that the Post Office has been equipped with a strategy that is viable. All of this depends on funding,' he told the committee. He also said they were looking together with the Department of Communications and Digital Technologies to find an alternative to pay about R509m owed to statutory bodies such as SARS and medical aids. 'That will discharge the rescue plan and hand over the business back to the shareholder,' said Roopal. Damons said the department has asked them to negotiate with the creditors owed R509m in statutory and payroll deductions. 'We started talking to these creditors about possible deferment of payment. The department asked us to have a discussion around deferring these payments until 31 March 2026. We reached out, and we have not finalised anything.' However, Damons said there was a lot of work left in terms of the exit strategy. 'We don't want to be irresponsible by leaving SAPO and finding they are back in this situation, and there is another application looming. 'Exiting business rescue would mean giving up the moratorium that is in place that protects SAPO from any legal proceedings; to start proceedings must get consent of business practitioners before approaching the court.'
Eyewitness News
26-05-2025
- Business
- Eyewitness News
Malatsi to appear before Parliament committee over new draft ICT policy
JOHANNESBURG - Communications Minister, Solly Malatsi could be in for a grilling in Parliament after the communications portfolio committee summoned him over a directive that could see billionaire Elon Musk's Starlink land in South Africa. This, after Malatsi's department published a policy directive for public comment last week, sparking speculation that government had been swayed to bend the rules for Musk. If passed, the policy will loosen Affirmative Action laws requiring foreign investors in telecoms to sell 30% of equity in their local entity to historically disadvantaged groups in order to qualify for operating licences. The Department of Communications and Digital Technologies said the proposed policy is not meant to subvert the country's transformation agenda. Instead, it would include a clause for companies to take part in equity equivalence programmes. This would see foreign firms invest in programmes geared towards equity, skills development and economic inclusion. In a statement published on X, communications portfolio committee chairperson Khusela Diko, said Malatsi must come before parliament to account for what she said appears to be a contravention of the Electronic Communications Act. Diko further described it as attempts to circumvent the law through policy directives not worth the paper they are written on and a glaring invitation for litigation. In a reply on X, Malatsi said he would honour the invitation for Tuesday's meeting. ALSO READ:
Eyewitness News
23-05-2025
- Business
- Eyewitness News
Communications Dept: Gazetting of draft policy in ICT sector has nothing to do with Starlink
JOHANNESBURG - The Department of Communications and Digital Technologies said that Friday's gazetting of a draft policy in the ICT sector has nothing to do with international satellite company, Starlink. Minister Solly Malatsi issued the draft policy direction for public comment on Friday. ALSO READ: • Companies who benefit from easing of BEE requirements need to invest in equity equivalent - Communications Dept • Communications Dept issues gazette to review B-BBEE licensing requirements for satellite service companies If passed, this will allow companies in the ICT sector, like Elon Musk's satellite internet company, Starlink, to operate without complying with a 30% black ownership requirement. The draft policy direction by Malatsi follows remarks by Musk that he had been denied a license to operate in South Africa because he was not black. If the proposed policy passes, the way would be paved for the company to operate in South Africa without being 30% black-owned. But the department's spokesperson, Kwena Moloto, denied that this move had anything to do with Starlink or this week's meeting between presidents Donald Trump and Cyril Ramaphosa, where Musk was present. With the public invited to make comments on the draft policy direction, the Economic Freedom Fighters (EFF) said that it would challenge the proposal in Parliament.
