Vodacom’s JSE listing met fierce resistance this week when a software developer demanded R160-million, claiming that the cellular giant had misled investors in its listing documents.
In October 2003 Kevin Jenkins, managing director of Number Secure, a mobile application developer, and Barry Blackburn, director of sales at Vodacom Service Provider, signed a partnership to provide a new storage application to back up user contact information.
The 24-month agreement stipulated that users would be charged a R5.70 subscription fee along with R2 for pushing data to a storage centre to be backed up in case a user lost a phone.
Out of the R5.70, Vodacom would receive R3.80 with Number Secure pocketing the remaining R1.90.
The companies would split the SMS charge with the product scheduled for launch in November 2003, according to a Pretoria High Court application filed by Number Secure in March 2006.
The agreement was delayed more than eight times by Vodacom, with a final date set for August 2005.
In his court application, Jenkins estimated loss of income at more than R100-million.
It said that while Number Secure was willing to implement the agreement, Vodacom refused and neglected to do so.
The initial court date was set for November 2007, then postponed until April 2008 and finally cancelled.
Vodacom agreed to an arbitration process overseen by a retired Appeals Court judge that began in September last year.
Jenkins is demanding R160-million in damages and expects a decision by the end of May.
In a Noseweek article entitled “Vodacom Killed Me” published this month, Jenkins’ business partner in the deal, 57-year-old Dieter Sauerbier, was reported to have killed himself in 2005.
According to the story, he was found with a note that read: “Barry Blackburn and Vodacom killed me, in the end I merely pulled the trigger.”
Jenkins was concerned that Vodacom’s pre-listing statement did not provide any information about the case against them.
He said: “I really believe that it is now the public at large that must decide whether Vodacom are representing their financial records correctly for the listing by not mentioning anything about our claim.
“We believe that if our case is successful it will have a serious impact on their share value. The only problem is that the outcome of our case will only happen after the listing,” he said.
“That’s very convenient for Vodacom, but unfortunate for the poor man in the street who has been misled,” Jenkins added.
Vodacom starts trading on May 5 and it has already received approval from the JSE despite the stock exchange having knowledge of the case.
Doug Doel, JSE’s general manager of issuer services, said: “We have subsequently engaged the sponsor and Vodacom on this matter. We have considered Vodacom’s response and are comfortable that (the claim) does not have a material effect on Vodacom’s financial position based on materiality test measures.”
But Jenkins said the JSE approved the listing because it would bring in a lot of money.
Dot Field, Vodacom’s spokesman, said: “Vodacom is currently involved in arbitration proceedings with Number Secure and thus it would be inappropriate for us to comment. Having said this, Vodacom denies the allegations of neglect.”
Vodacom JSE Listing discussion