On 15 September 2011, the Independent Communications Authority of South Africa ("the Authority") published its findings on the review of ownership and control of commercial services and limitations on broadcasting, electronic communications services and electronic communications network services (the "Review"). In this e-Alert we draw your attention to some of the key findings contained in the Review.

The Broadcasting sector

• The Authority proposes to amend the current restrictions on foreign ownership in commercial broadcasting services to state that "One foreign person shall not, whether directly or indirectly, have securities in a South African unlisted public or private company holding a commercial broadcasting licence equal to or exceeding twenty-five percent."
  
  
• The Authority also states that listed and unlisted companies should not be treated differently and that all of the objects of the Electronic Communications Act, 2005 (the "ECA") should be applied to all licensees who wish offer services in the broadcasting sector.
  
  
• The Authority recommends that "Control" of an individual licence be defined as:
  
  
  • 25% shareholding; or
    
    
  • the right to direct or otherwise control the majority of votes attached to the shareholders' issued shares; or
    
    
  • the right or ability to appoint or remove directors of voting rights at meetings of the board of directors; or
    
    
  • the right to control the management of the enterprise.
    
    
• The Authority also recommends that the HDI equity ownership threshold be set at a minimum of 30% for all licensees (not just new licensees). Existing licensees who do not comply will be given an 18-24 months grace period to comply.

The Electronic communications sector

• The Authority will investigate the national stance on whether the ECA empowers the Authority to prescribe regulations on foreign limitations on ECS and ECNS licences.
  
  
• The Authority proposes that transfers of licences must be restricted to extent that they reduce empowerment stipulations, ignore public interests or undermine the objects of the ECA. The Authority adds that the Competition Commission is best placed to adjudicate over concentration matters or mergers or acquisitions.

Contact us:

Peter Grealy | Partner
Tel: +27 11 530 5218 | peter.grealy@webberwentzel.com

Robby Coelho | Partner
Tel: +27 11 530 5402 | robby.coelho@webberwentzel.com

Nozipho Mngomezulu | Partner
Tel: +27 11 530 5855 | nozipho.mngomezulu@webberwentzel.com

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Important Legal Notice: The information in this document is provided for general information purposes only. It is not legal or other professional advice. Whilst we have taken reasonable steps to ensure information in this document is accurate, we accept no liability or responsibility, to the extent allowed by law, if any information is, for any reason, incorrect or corrupted, or for any loss or damage that may arise from reliance on information in this document.

©Webber Wentzel 2011