South Africa - Industry has called for alignment of sectoral Black Economic Empowerment policies with national policies

[business day] TELECOMMUNICATION and broadcasting companies have called on the regulator to align its objectives of increasing the participation of black people in the industry with broader government policy.

The Independent Communications Authority of SA (Icasa) says a lot more needs to be done to fully transform the sector, in all aspects of broad-based black economic empowerment (BBBEE), including ownership and control.

Icasa held hearings earlier this month on the proposed regulations of ownership and control by black people in the broadcasting and telecommunications licensed entities.

This occurs under the Electronic Communications Act, which requires that Icasa regulate black empowerment in the public interest and also promote the empowerment of historically disadvantaged people with particular attention to the needs of women, opportunities for the youth and disabled people.

The act also allows Icasa to draw up regulations on empowerment requirements which aim to change the racial composition of ownership and management structures of companies.

Icasa has asked the industry what constitutes ownership and control, whether to limit foreign ownership and how the regulator can ensure empowerment stakes are not diluted in listed groups.

During the hearings, there was consensus among participants that Icasa should not narrow black economic empowerment down to ownership. Altech said exclusive focus on equity was outdated and that ownership should be expanded to BBBEE, including a clear description of historically disadvantaged groups.

Icasa has imposed a minimum of 30% black ownership on all licence holders and aims to include a minimum target for black women and youth and black disabled people that companies include in their empowerment programme.

Altech said Icasa should not reinvent the wheel and should rather align its plans with that of the Department of Trade and Industry's codes of good practice, which adequately address empowerment. "No sector specific regulation is necessary," Altech said.

Cell C proposed that Icasa hold a workshop before formulating regulations to allow shareholders to give their input.

The Internet Service Providers Association said while it welcomed Icasa's proposal, its members - mainly small to medium firms - would find it challenging to address some aspects of the regulation because of the "extreme scarcity of supply of skilled individuals in certain of these groupings".

"The internet industry is highly technical. The technology is advancing at a very rapid rate.

"Thus there is a requirement for individuals who have the required talents, education, skills and experience to manage internet service providers.

Unfortunately, these individuals are in limited supply. Most of those who are available are not black. Of those who are black, many have already been employed by large organisations with deep budgets for BEE recruitment," it said.

Icasa could also face a challenge from the industry as the act limits its involvement in regulating black empowerment to equity.

Kate Skinner, of the Save Our SABC broadcasting industry coalition, argued Icasa's role was beyond equity and should it regulate in the public interest.

"Icasa has to push its mandate to the limit and act in the public interest," she said during the presentation.

The act imposes foreign ownership restrictions on broadcasting services but is silent on telecommunications operators, allowing Cell C and Vodacom to be more than 60% foreign owned.

In its response to the discussion document, Cell C said Icasa was not empowered to impose foreign limitation on ownership and that any approach in that regard would result in reduced investment, technological development and failure to meet South African growth targets.

Cell C also said that Icasa should not regulate foreign ownership and that any form of foreign ownership regulation should form part of a national policy spearheaded by the Department of Trade and Industry. Telkom agreed with Cell C and suggested that Icasa reviewed its proposal as it could be contrary to the spirit of its international commitments by being viewed as unfairly discriminating against foreign ownership.

Skinner says companies with foreign ownership should be compelled to do training and ensure technology transfer. Management also needs to be South African.

On promoting black ownership and control in listed companies, MTN says there are inherent difficulties with controlling shares on the JSE, as they ought to be traded in an unrestricted way, as anything else may have a detrimental impact on the share price.

Telkom proposed that listed licence holders provide their black investors with veto rights on issues such as transfer or a decrease in black shareholding.

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