Communications minister Solly Malatsi has thrown his weight behind a plan that could reshape South Africa’s digital infrastructure Reit landscape, opening the door for fibre networks, mobile towers and data centres to be treated like income-generating property assets. For a sector that has spent years trying to pull in deeper pools of capital, the proposal could prove to be one of the biggest policy shifts yet.
Speaking during his budget vote speech this week, Malatsi said government is still working to stabilise the basics, but also wants “innovative ways” to drive investment into the sector. His message was clear: South Africa needs fresh financing tools if it is serious about growing its digital economy at scale.
“Allowing companies that own digital infrastructure to participate in the Reit regime could unlock long-term capital, attract foreign direct investment and provide a much-needed injection into the ICT sector,” the minister said. He added that the industry has already had extensive engagement with National Treasury and Sars on the matter.
That endorsement matters. While the minister can support the policy direction, the real legislative power sits with Treasury, which controls the tax code. In other words, Malatsi is backing the idea — but the hard work of turning that support into a workable legal framework still lies ahead.
At the centre of the debate is section 25BB of the Income Tax Act, the clause that governs South Africa’s Reit regime. This is the same structure that has helped build the country’s listed property sector, including giants such as Growthpoint, Redefine and Resilient. Under the current rules, qualifying Reits benefit from favourable tax treatment, making them attractive vehicles for investors and a reliable source of capital for property owners.
The challenge is that the existing framework was designed with shopping centres, office blocks and warehouses in mind — not data networks, towers or cloud facilities. For digital infrastructure to fit into the model, lawmakers would need to decide what counts as “immovable property” and what is simply a service fee.
That is where the drafting gets tricky. A tower company charging for co-location space may arguably fall within the spirit of the regime. A data centre that rents out rack space could also fit. But once you start separating out power supply, cooling, cross-connects and managed services, the line between property and service revenue becomes far less clear.
Why South Africa’s digital infrastructure Reit proposal matters now
The push comes as South Africa increasingly views digital infrastructure as part of the country’s core economic backbone, alongside roads, rail and electricity. In finance minister Enoch Godongwana’s February budget speech, digital infrastructure was effectively elevated to the same strategic level as energy, ports and transport.
Godongwana said Treasury would this year “explore options” to help data centres and related infrastructure expand investment in South Africa and strengthen the country’s role as a regional technology hub. That statement was widely welcomed by industry players, who have long argued that the country needs more than policy rhetoric if it wants to compete for global cloud and connectivity investment.
We have seen similar thinking play out in other markets. In the United States, the Reit regime was expanded to cover communications infrastructure in the early 2010s, paving the way for companies such as American Tower Corporation, Crown Castle, SBA Communications and Equinix to grow into dominant players. India later followed with infrastructure investment trusts, which helped monetise tower and fibre assets. Parts of Europe have also moved in the same direction.
For South Africa, a tailored digital infrastructure Reit could create a new route for companies to list on the JSE and raise money from local pension funds and insurers. It could also give international investors a structure they understand, making it easier for them to commit capital to South African assets.
That is a big deal in a market where infrastructure funding is often expensive and slow to secure. If structured properly, a digital infrastructure Reit could provide long-term capital for expansion, support consolidation in the sector and potentially bring greater depth to the local investment landscape.
But there are risks too. Competition concerns cannot be ignored, especially if tower and fibre assets become concentrated inside a small number of dominant vehicles. In more mature markets, mobile operators have complained that tower companies using Reit structures were able to extract high rents, leaving network operators with less bargaining power.
There is also the question of how the JSE’s listings requirements would need to change. The exchange’s current Reit rules are built around traditional property portfolios, so any move into digital infrastructure would require careful alignment between tax law, securities regulation and commercial reality.
Industry leaders are already pointing to the energy issue as a major condition for success. Teraco CEO Jan Hnizdo has argued that ongoing investment depends on a smooth renewable energy wheeling framework between Eskom, municipalities and data centre operators. In his view, such a framework would unlock private investment in renewable power while also allowing Eskom to focus more heavily on transmission upgrades needed to expand the grid.
That point is especially important in South Africa, where power supply remains one of the biggest bottlenecks to scaling digital capacity. Data centres are hungry users of electricity, and global hyperscalers will not deploy at the pace government wants unless the power side is credible, affordable and reliable.
Still, the policy direction is notable. Malatsi’s support suggests that government is no longer treating digital infrastructure as a niche issue. Instead, it is being positioned as a strategic growth asset capable of attracting foreign capital, supporting jobs and strengthening South Africa’s place in the global digital economy.
For now, the idea remains just that — an idea with political backing, but no final legislative outcome. Yet the fact that a cabinet minister has publicly endorsed extending the Reit regime to digital infrastructure signals growing momentum behind a reform that the sector has chased for years. If Treasury moves, South Africa could be on the verge of creating a powerful new funding channel for the networks, towers and data centres that will carry the country’s next wave of growth.