Vodacom Holds `Promising' Talks With Democratic Republic of Congo's Kabila

Vodacom Group Ltd. said it held talks with Democratic Republic of Congo President Joseph Kabila and asked for consistency in the application and interpretation of tax laws affecting its local mobile-phone venture.

“There were new taxes, and the concern was really about how they were administering the tax; there was uncertainty,” Vodacom Chief Executive Officer Pieter Uys said in an interview in Johannesburg today. “We discussed the contribution that telecommunications makes to a country’s economy and we asked for his support to develop it further.”

Vodacom is controlled by Vodafone Group Plc., the world’s biggest mobile-phone operator. Vodacom has outstanding claims in the Congo after disputing the interpretation of tax laws, and incurring penalties and interest on its tax bill, Uys said. In the first quarter, Vodacom was hit with a new tax of $35 million, Uys said. The Congo government also decided to levy tax on all mobile-phone numbers. In response, Vodacom cut low-use numbers from its customer base.

Vodacom Chairman Peter Moyo said the government was making “promising noises” about creating a predictable business environment. Mayo said there is also progress in resolving a dispute with Vodacom’s minority partner in Vodacom Congo Sprl, as both sides have agreed to arbitration.

Vodacom is seeking the agreement of its minority partner, Congo Wireless Networks, for a $484 million capital increase and the conversion of the operation to a public company.

“We did not ask for help” from Kabila in the conflict over Vodacom Congo, which is 51 percent owned by Vodacom, Uys said. “I did brief him on what we are doing to resolve it,” he said.

“I did also meet with our other shareholders in the Congo and we are working on all fronts to find a solution,” Uys said. “We continue to support management in the running of that business.”

To contact the reporter on this story: Nicky Smith in Johannesburg at nsmith38@bloomberg.net

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