South African ISPs ordered to cancel five-year-old transactions

South Africa’s Independent Communications Authority (Icasa) has ordered ISPs to reverse corporate transactions they entered into more than five years ago.

This was reported by the Association of Internet Service Providers SA (Ispa), which called on the industry regulator to declare an amnesty for existing transactions that changed the ownership structure of Internet providers.

Ispa also called on the regulator to clear up industry confusion surrounding licensees making deals that affect their ownership structure.

Transactions resulting in a change in control of an electronic communications network license required authorization from Icasa. Other transactions only required them to notify Icasa seven days before the change.

However, according to Ispa, it was not always clear when companies needed regulatory approval.

According to the association, at the heart of this confusion lies the inability of Icasa to take a clear position.

“The difference between these two processes is huge,” Ispa said.

He explained that an application for pre-approval requires payment of a non-refundable registration fee of R69,409 per license, and Icasa can take 8 to 15 months to process.

There is no cost to the notice and no further action is required from Icasa other than updating its records.

“We had a decade of confusion because a lot of licensees were using the wrong process,” Ispa regulatory adviser Dominic Kall said.

“Currently, Icasa, despite its stubborn silence on the matter, is demanding that reverse licensee deals be completed more than five years ago.”

As a result, Ispa demanded that Icasa issue an amnesty and take immediate steps to clarify its position on what constitutes a change in license control.

Ispa is seeking an amnesty allowing affected licensees to contact Icasa to resolve their situation without any sanctions. Icasa will continue to receive and evaluate transfer approval applications,” Kall said.

Ispa noted recent proposals to introduce a new process whereby licensees would submit a provisional application to Icasa.

The regulator will then decide which process to follow.

In April 2021, Icasa introduced rules that forces ISPs to be 30% black owned.

As part of these rules, ISPs must notify Icasa of any transactions that could dilute equity holdings of historically disadvantaged groups and black owners.

In March 2022, Icasa released draft rules for public comment, which require ISPs to apply for permission before making any changes to your shareholding.

However, Ispa said that Icasa was unable to provide any insight into how it determines whether a transaction includes a change in license control.

Ispa said its call for clarity echoed a call for Icasa to limit bureaucratic red tape by reducing the number of rules small and medium-sized licensees must comply with.

The association said this would bring Icasa in line with President Cyril Ramaphosa’s commitment in his 2022 State of the Nation Address.

“There are too many rules in this country that are overly complex, costly and difficult to enforce. This prevents companies from growing and creating jobs,” said Ramaphosa.

Ramaphosa pledged to implement “far-reaching measures to unleash the potential of small businesses, micro-businesses and informal businesses.”

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