MOSES MUSHI | How South Africa’s telecoms boom is quietly crushing black contractors

South Africa is building the future at record speed, and 5G towers are rising across suburbs and townships, fibre trenches slice through pavements, and data usage is exploding. Vodacom and MTN are spending billions of rand each year to expand and modernise their networks.

From Sandton boardrooms to parliament, the narrative is triumphant — digital growth, technological advancement, connectivity for all.

But behind the promise of faster downloads and smart cities lies a more uncomfortable reality. The telecoms boom wiring South Africa’s future may be systematically squeezing out the very black-owned businesses that empowerment policies were designed to uplift.

This shift is not dramatic enough to trigger headlines, and there are no public confrontations or spectacular court battles. Instead, it unfolds quietly, through delayed payments, reduced subcontracting, tightened procurement pipelines and small engineering firms shutting their doors one by one.

Over the past decade, major mobile operators have consolidated infrastructure rollout under large managed services agreements with global technology vendors such as Huawei and ZTE. The commercial logic is straightforward, multinational vendors provide vertically integrated solutions in which equipment, software, technical expertise, network management and implementation sit under one umbrella, they manufacture at a global scale, price aggressively and absorb extended payment cycles.

For operators under pressure to expand 5G coverage while competing on tariffs, the model is efficient, it reduces fragmentation, centralises accountability and accelerates rollout. But shareholder efficiency can suffocate small contractors.

Telecom infrastructure was historically capital-intensive and dominated by established players, and Black Economic Empowerment was meant to disrupt that exclusion. Over time, black-owned SMEs carved out space in tower installations, radio frequency deployment, fibre trenching and site construction, gaining a foothold in a strategic high-tech sector.

Today, many of those firms describe themselves as precarious subcontractors operating at the mercy of multinational intermediaries.

The pattern described by contractors is consistent. Work is completed, invoices are submitted, and payments are delayed through layers of certification, compliance queries and administrative back-and-forth, while the primary vendor operating under a consolidated agreement invoices the operator under broader commercial terms. Whether such delays arise from inefficiency or structural imbalances in contracting power is difficult to establish, what is clear is the financial strain they impose on smaller firms.

Unlike multinational vendors with billion-dollar reserves, black-owned SMEs operate on thin margins; they pay crews weekly, finance vehicles and safety compliance upfront and carry equipment costs before invoices are settled. They cannot wait six months or an entire financial cycle to be paid; cash flow tightens, debt mounts, retrenchments follow, and some firms close quietly.

Concerns about delayed payment are not new. In 2016, a South African contractor publicly alleged that late payments by Huawei contributed to its liquidation, an allegation reported at the time by TechCentral, and Huawei denied wrongdoing. Whatever the specifics of that case, it exposed a structural imbalance ― small contractors depend on predictable cash flow, while multinational vendors can withstand extended billing cycles.

Research on small enterprise participation in South Africa, including World Bank studies, consistently identifies cash flow instability as a primary driver of SME failure. In industries dominated by large balance sheets and long payment cycles, survival becomes a financing challenge rather than merely a technical one.

Unlike multinational vendors with billion-dollar reserves, black-owned SMEs operate on thin margins; they pay crews weekly, finance vehicles and safety compliance upfront and carry equipment costs before invoices are settled. They cannot wait six months or an entire financial cycle to be paid; cash flow tightens, debt mounts, retrenchments follow, and some firms close quietly.

As global vendors deepen their footprint, access to infrastructure work increasingly flows through a single gatekeeper, contracts that once moved directly from operators to multiple local contractors now pass through vertically integrated intermediaries.

Cost drives this shift. Chinese technology manufacturers operate at an enormous scale. Much of the equipment used in radio frequency towers and 5G networks is produced abroad within integrated supply chains, and bundled pricing models allow global vendors to undercut local competitors. For operators facing intense tariff competition and declining traditional voice call revenues as consumers migrate to data-based apps, the savings are compelling.

But transformation cannot survive on cost efficiency alone. BEE was not introduced to create decorative participation, it was meant to build sustainable black ownership and industrial capacity. When local firms are confined to subcontracting roles without pricing power, predictable payment cycles or capital buffers, empowerment becomes fragile.

While BEE scorecards may recognise foreign-owned entities operating locally, profits generated by multinational vendors do not necessarily remain in South Africa, and in an economy with unemployment above 30 percent, that matters.

Telecommunications is foundational infrastructure, whoever builds and maintains it shapes the digital backbone of the economy. If South Africa becomes an importing consumer of telecom technology primarily, equipment built abroad and deployed under externally controlled frameworks, domestic industrial participation narrows.

When black-owned engineering firms collapse, the damage extends beyond balance sheets, jobs disappear, skills pipelines weaken, apprenticeships shrink, and township-based crews are retrenched.

This is not an argument against global technology, South Africa cannot isolate itself, and multinational vendors bring expertise and scale that accelerate connectivity. The issue is whether inclusion is intentional or incidental.

If managed services contracts dominate infrastructure rollout, supplier development obligations must extend through the full contracting chain; otherwise, empowerment becomes a box-ticking exercise at the operator level while consolidation deepens below.

Telecommunications operates within public-spectrum allocations, a national asset, and where market concentration intersects with transformation policy, oversight becomes a public-interest matter.

The portfolio committee on communications and digital technologies should require annual public disclosure from licensed operators detailing the proportion of infrastructure expenditure flowing directly to black-owned SMEs, the structure of managed services arrangements and average payment periods to subcontractors.

Icasa should examine whether supplier development and fair payment commitments can be embedded into future licence conditions or spectrum awards.

The Competition Commission should assess whether procurement consolidation creates structural barriers to SME participation, not to presume wrongdoing, but to determine whether market structure entrenches dominance across the value chain.

National Treasury cannot directly regulate private payment terms, but, working with the department of communications and digital technologies, it can explore policy instruments, including sector codes and SME support frameworks, that incentivise or require 30-day payment terms for public licences and spectrum allocations.

Future spectrum awards and licence renewals should tie supplier development commitments to measurable outcomes, not merely ownership structures, but verifiable expenditure directed towards sustainable, independent, black-owned enterprises.

None of these measures excludes global vendors, they ensure that participation in a regulated telecom market carries reciprocal obligations to the domestic economy.

South Africa does not lack empowerment legislation, it lacks enforcement depth in concentrated high-tech sectors where consolidation can quietly hollow out participation. If public spectrum is granted, public accountability must follow.

• Moses Mushi is a former director of communication at the department of public service and administration and writes in his personal capacity.