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Vodacom warns of dire ‘Please Call Me’ financial implications

Sibahle Malinga
By Sibahle Malinga, ITWeb senior news journalist.
Johannesburg, 28 Feb 2024
Nkosana Makate and Vodacom have been embroiled in litigation over the ‘Please Call Me’ product for more than 15 years.
Nkosana Makate and Vodacom have been embroiled in litigation over the ‘Please Call Me’ product for more than 15 years.

Vodacom has lodged an application with the Constitutional Court for leave to appeal the Supreme Court of Appeal (SCA) ruling on the ‘Please Call Me’ matter.

The application comes after the mobile operator suffered another loss in the legal battle, when the Supreme Court of Appeal this month ordered Vodacom to determine a new compensation figure for Please Call Me inventor Nkosana Makate – within 30 days of the order.

According to the ruling, Vodacom must pay Makate between 5% and 7.5% of the total voice revenue generated by the Please Call Me service, derived from prepaid or contract offerings from March 2001 to March 2021 (18 years), including interest.

According to media reports, Makate is entitled to receive several billions of rands in compensation from Vodacom, as per calculations stipulated by the SCA.

Makate is also entitled to 27% of the Please Call Me messages sent daily as being revenue generated by the return calls, notes the ruling.

Providing an update in a shareholder statement today, Vodacom SA explains that if the SCA judgement is upheld, this would negatively impact its employees, shareholders and the company’s contribution to public finances.

It would also have an impact on its network investment, coverage and social programmes, and the attractiveness of SA as an investment destination, it says.

“As a responsible corporate citizen, Vodacom is respectful of the judicial system and abides by the laws of South Africa. Having considered the SCA judgement and order, it is Vodacom’s view that there are key aspects of this matter which do not accord with the spirit of the law, and that the judgement and order are fundamentally flawed,” notes the statement.

“It is apparent from the dissenting judgement of the SCA that the majority judgement overlooked or ignored many of the issues between the parties, and their evidence and submissions relating to those issues."

According to Vodacom, the SCA’s order impinges on the Rule of Law in terms of section one of the Constitution of the Republic of South Africa 1996 and deprives the operator of its right to a fair trial under section 34 of the Constitution;

In its statement, it says that as a matter of law, its application for leave to appeal makes several submissions:

  • The SCA misdirects itself by considering and deciding on issues which had not been placed before it for adjudication by either Vodacom or Makate.
  • The SCA selectively chooses to only have regard to Makate’s evidence, as in the case of models for computing compensation payable to Makate, while ignoring swathes of evidence in this regard presented by Vodacom contesting Makate’s version.
  • The SCA orders are unintelligible, incomprehensible and vague, rendering them incapable of implementation and enforcement.
'Please Call Me' inventor, Nkosana Makate.
'Please Call Me' inventor, Nkosana Makate.

Makate and Vodacom have been embroiled in litigation over the Please Call Me product for more than 15 years. The former Vodacom employee reportedly came up with the idea in 2000.

“Vodacom has previously negotiated with Makate in an attempt to agree reasonable compensation payable to him,” says the telco.

“These efforts, to date, unfortunately have failed. Vodacom remains open to constructive dialogue and good faith negotiations and, without prejudice to its Constitutional Court appeal process, to agree a fair and reasonable amount as compensation for Makate’s idea that led to the development of the Please Call Me product.”

In line with a 2016 Constitutional Court order, Vodacom Group CEO Shameel Joosub determined a compensation figure of R47 million to Makate for the idea.

Makate rejected the offer and brought an application to the Gauteng division of the High Court to have Joosub’s determination judicially reviewed and set aside.

On 8 February 2022, the High Court set aside the group CEO’s figure and ordered him to reconsider the settlement offered to Makate.

Vodacom on 25 February 2022 launched an application for leave to appeal against the judgement and order of the High Court.

Makate previously claimed Vodacom owes him a settlement of R10.2 billion, which excludes accrued interest and all the legal fees incurred since the Constitutional Court judgement.

In an interview last month, ITWeb asked Makate how much compensation he feels he deserves from Vodacom, but he declined to share specific figures, noting the court order is quite clear on how the calculations should be done.

“The amount still has to be calculated and we have the supremacy of the law in South Africa…The calculations are quite clear and the [Vodacom] CEO can do them or we can also do them on his behalf. Let’s allow the court order to be implemented. The ball is now in Vodacom’s court and let’s allow them to deal with that,” he said at the time.