How Drc Turned Screws On Vodacom, Other Operators

One afternoon in December 2021, the regional heads of four of the biggest telecommunications operators in Africa were summoned to the Palais de la Nation, a presidential mansion overlooking the river in the Democratic Republic of Congo's capital of Kinshasa.

When the meeting began, officials from President Felix Tshisekedi's administration started grilling the executives, mostly foreign nationals who represented Vodacom, Orange, Airtel and Africell, according to people in attendance. The bureaucrats informed them that the government was preparing strict new rules that would raise their companies' tax bills significantly.

As the CEOs began to protest, a white man with dark hair who had been silently sitting in the back of the room broke in to tell them that they'd better comply, the people said. This was Philippe Heilmann, a Belgian national and the head of the Congolese offshoot of a Swiss consulting firm that describes itself as a "technology-driven company that provides digital-enabled solutions to public and private organisations".

The matter of telecoms taxes might seem niche, but in the case of Congo the stakes are enormous. With a population of around 100 million, the country is among the world's least connected in terms of broadband internet access, and millions are locked out of the formal economy. Closing this gap could unlock billions - both for Congo's economy as well as for its telecoms providers.

According to a report by the lobbying group GSMA, mobile technologies and services generated 8.1% of GDP across sub-Saharan Africa in 2022, creating roughly $170-billion in value. For wireless companies such as Africell, Vodacom, Airtel and Orange, Congo is the next big market. Kenya and South Africa, for instance, have populations about half the size of Congo, and their annual smartphone market revenues were $2.2-billion and $9-billion in 2022. Congo's, by comparison, was only $1.4-billion.

Congo's government has for years accused telecoms companies, which are among the largest multinationals in Africa, of hiding earnings and dodging taxes - allegations the companies strongly deny. Vodacom, officials like to point out, has never declared a profit after nearly two decades operating in the country, seemingly implying that the company is avoiding the additional taxes it would pay on profits. "I ask the question, is it normal that for more than 15 years a telecoms company can make losses?" said Anthony Nkinzo Kamole, the MD of Congo's National Investment Promotion Agency.

Russel Eastaugh, an expert on African tax laws at the Regan van Rooy firm, observed that it's common for African governments to target foreign-owned phone companies with additional tax bills. Because the sector's steady cash flow makes operators relatively easy to tax, the International Monetary Fund noted in a recent working paper, governments in developing countries often rely on them to supplement their budgets. But in Congo, where the average tax rate for the telecoms sector is 34% - 8% higher than the norm in sub-Saharan Africa, according to GSMA's latest mobile taxation report - this practice has been taken to new extremes.

Eastaugh said that although the predicament that the operators in Congo found themselves in isn't rare, the way it unfolded was. "Usually with these types of situations in Africa, everyone heads off to court or into negotiations of some sort and a more reasonable settlement is reached," he said. Congo's telecoms sector, however, has little precedent for this kind of process.

According to corporate filings, 5C Energy was founded in Switzerland in early 2016, and 5C Energy RDC was set up in Kinshasa 18 months later. Heilman joined the latter firm in November 2019, several weeks after its founding. On archived versions of its website, 5C Energy, which changed its name to Veltio Consulting after it stopped working in Congo, listed TotalEnergies, Shell and Perenco as among its early clients. Two of the companies contacted said they did not have any record of having worked with 5C Energy, and the third did not respond to a request for comment.

With the exception of brief mentions in Congolese media, Heilmann, who represented 5C Energy RDC that day in the palace, has almost no online presence. His name is not registered on any major social media platforms, and he hasn't been written about in the international press. Multiple voice, text and WhatsApp messages sent over several months to a Congolese number provided for Heilmann by somebody close to the Tshisekedi administration were never answered, nor were multiple messages left with numbers connected to another businesses registered under his name, Dreams of Africa. Filings for that company and for 5C Energy, however, do show th