South Africa’s push for faster, cheaper and more reliable internet is now being framed as a question of who should carry the cost, and communications minister Solly Malatsi is making it plain that the state cannot do it alone. In a hard-nosed budget speech in Parliament, Malatsi used his R2.55-billion budget vote to argue that partial privatisation and commercial partnerships are no longer taboos, but practical tools for expanding digital access in a country where fiscal pressure is biting across government.
The minister’s message was direct: the old model of relying on 100% state ownership of portfolio entities is “no longer sustainable in the context of our fiscal reality”. That line will resonate far beyond the communications portfolio, because it reflects a wider debate now running through Pretoria — how the state funds struggling entities without sinking more money into institutions already under severe strain.
Malatsi told MPs that the department’s budget constraints are not unique, but they do have real consequences. “We can no longer hide behind the lack of funds to explain why we fall short of what is expected of us,” he said. That was not just a complaint about treasury limits. It was also a signal that the department wants to shift from a mindset of entitlement to one of collaboration.
He argued that South Africa’s private sector remains one of the country’s strongest assets, especially in a sector as capital-intensive as connectivity. The minister said the department’s impact will always be limited if it acts alone, but can be multiplied when it works with private operators, investors and technology partners. For South Africa’s broadband and digital inclusion agenda, that is a significant policy turn.
The speech comes at a time when South Africa’s connectivity conversation is changing shape. A recent digital infrastructure investment study commissioned by the Development Bank of South Africa suggests the country’s real connectivity access gap is now just 2.2% of households. On the surface, that sounds like progress. But Malatsi says the headline figure masks a deeper problem: being “covered” by a network is not the same as being able to afford, understand and use the service.
That distinction matters in a country where digital access is still closely tied to income, geography and device ownership. Malatsi said meaningful participation in the digital economy depends on whether people can “reach it, afford it, understand it and use it”. In other words, South Africa may be getting closer to physical coverage, but it is still struggling with the realities of inclusion.
As we reported earlier, the department is now working with the World Bank to review South Africa’s connectivity targets. The aim is to move beyond simplistic coverage metrics and include issues such as affordability, device penetration, active usage and participation in the digital economy. That could reshape how government measures success, and where it directs future funding.
Malatsi’s push for partial privatisation and the future of South African SOEs
Malatsi was careful not to suggest a wholesale sell-off of state assets. Instead, he repeatedly framed the issue as partnerships, with partial privatisation used “in some situations” where it makes operational and financial sense. That distinction is important, especially in a political environment where privatisation remains a loaded term.
One of the clearest examples is the South African Post Office, which has been in business rescue since July 2023. The entity has already burned through nearly R10-billion over the past decade, and still needs another R3.8-billion to stabilise its finances. Both National Treasury and the communications department have already said they do not have the money to cover that gap.
In that context, public-private partnerships are no longer an ideological talking point. They are increasingly being presented as a survival strategy. The Post Office’s crisis is a reminder that the state’s ability to keep funding distressed entities is not limitless, and that new operating models may be the only route left if services are to continue.
Malatsi said the reality is becoming impossible to ignore: “100% state ownership of our portfolio entities is no longer sustainable”. That is a striking admission from a minister whose portfolio includes some of the country’s most visible and politically sensitive public institutions. It also opens the door to a broader reform agenda that could affect the shape of the communications sector for years to come.
The minister also acknowledged that investors still see South Africa’s policy environment as “interventionist and protectionist”. He said the way responsibilities are split across the communications portfolio creates opacity that makes investment harder, not easier. That is a problem government will have to address if it wants to attract private capital into broadband, postal services, broadcasting and related infrastructure.
There are already signs of that shift in policy thinking. The department is pushing the Electronic Communications Amendment Bill, which is intended to modernise licensing rules and strengthen competition. For investors and operators, a simpler and more predictable regulatory framework could be just as important as direct financial support.
Malatsi also pointed to equity-equivalent investment programmes as a way to complement ownership requirements in telecoms. That is a notable signal to the foreign-investor community, which has long argued that the existing 30% historically disadvantaged ownership rule can be a barrier to market entry. The idea is not new, but the minister’s public backing gives it renewed momentum.
Another major point in the speech was the country’s approach to low-Earth-orbit satellites. Malatsi said South Africa cannot afford to wait a decade to build domestic LEO capability, and should instead “create conditions for international operators to serve our people now”. That reflects a pragmatic stance: rather than waiting for a fully local solution, government may be willing to prioritise immediate service delivery.
For consumers, the implications are significant. If done properly, partnerships could accelerate the rollout of broadband, lower costs and improve reliability in underserved areas. But the politics will be delicate, especially where state entities, labour and existing policy frameworks are concerned. Any move toward partial privatisation will almost certainly face scrutiny over control, equity and long-term public interest.
Still, the core message from Malatsi’s budget vote was consistent: South Africa needs to move from coverage to participation, from access to use, and from isolated interventions to a more coherent digital ecosystem. That is a useful way of framing the country’s digital challenge, because it moves the debate beyond infrastructure alone and into the harder question of whether ordinary South Africans can actually benefit.
For now, the communications minister has made his position clear. In a constrained fiscal environment, the old state-first model is being replaced by a more flexible approach built on partnerships, selective privatisation and regulatory reform. Whether that delivers the promised results will depend on execution, but the direction of travel is unmistakable — and it could reshape South Africa’s digital future faster than many expected.