Please Call Me’s Makate misleading court by claiming he only wants R9.4-billion, says Vodacom

Vodacom has said that Nkosana Kenneth Makate’s most recent statements that he is “only” seeking R9.4 billion in compensation for his “buzzing option” idea are misleading.

This is according to papers Vodacom filed with the Constitutional Court earlier this month in reply to Makate’s responding submission.

Vodacom has applied to the Constitutional Court for permission to appeal a Supreme Court ruling in favour of Makate.

In February, the Supreme Court of Appeal (SCA) ordered that Vodacom must pay Makate between 5% and 7.5% of the total voice revenue its Please Call Me product generated over 18 years, plus interest.

Crucially, it also ordered Vodacom to use Makate’s models to calculate the revenue and consequent compensation, rather than its own.

According to Vodacom, Makate’s court papers showed that the capital amount alone was R9.7 billion with 5% revenue share, growing to almost R29 billion when adding mora interest.

When calculated with 7.5% revenue share, the amount becomes R63 billion with interest.

Makate said in his responding papers that Vodacom’s claim that the SCA’s order amounts to compensation in excess of R60 billion was, “with respect, entirely sensational”.

He said that when the SCA’s order is properly interpreted and the correct variables are substituted, the payment due from Vodacom amounted to R9.4 billion.

However, Vodacom said this was misleading, as that only represented the capital amount, excluding the interest the SCA ordered it to pay.

Vodacom is appealing to the Constitutional Court because it says the SCA ruling is vague and unenforceable.

Its first objection is that the order was unspecific about the revenue share percentage, giving a range of between 5% and 7.5% with no indication of how the correct percentage should be calculated.

Secondly, the SCA order stipulated that Vodacom must pay either mora interest or interest in terms of section 2A(5) of the Prescribed Rate of Interest Act, with no indication of which should apply.

According to Vodacom, the order was little more than a copy-and-paste exercise by the Supreme Court majority, who appeared to have simply substituted Makate’s example order for their own.

“There is simply no indication that the SCA applied its mind to these issues, whether in the order itself or its judgment,” Vodacom stated.

However, Makate asserted that, within the context of the Supreme Court hearings, it was clear how the order should be interpreted.

Additionally, he abandoned the ambiguous parts of the order, including the “7.5%” and where it allowed special interest as an alternative to mora interest.

Effectively, Makate has attempted to ensure the order is read as 5% Please Call Me revenue share plus mora interest.

However, Vodacom said he couldn’t do that.

“Mr Makate does not abandon the SCA’s orders in their entirety nor any particular one of its orders,” it stated.

“What he attempts to do instead is to rewrite the SCA majority’s order by ‘abandoning’ select words within an order in the hope that it reads more sensibly,” said Vodacom.

“Mr Makate cannot rescue the inchoate order by striking out its inconvenient portions.”

Makate has been embroiled in this legal battle with Vodacom since 2008.

He launched a legal challenge after coming up with the idea of sending a missed call to someone’s phone without airtime while a trainee accountant at Vodacom.

Emails in court documents show that he pitched the idea to his boss and wrote a memo about it on 21 November 2000. He called it the “buzzing option”.

Vodacom launched its first version of Please Call Me in March 2001 — two months after MTN introduced a similar product.

The case first reached the Constitutional Court eight years ago after the High Court and Supreme Court of Appeal found in favour of Vodacom.

Makate appealed to the Constitutional Court, which ruled in 2016 that Vodacom owed him compensation.

The apex court’s ruling ignored the arguments surrounding intellectual property and focused on the likelihood that Makate and his superiors had a verbal agreement regarding compensation.

It ruled that Vodacom and Makate must negotiate fair compensation in good faith.

Foreseeing a breakdown in talks, the court also accepted Makate’s suggestion that Vodacom’s current CEO be designated the deadlock breaker — in line with the discussions he had with his superiors in 2001.

Subsequent court documents showed that Makate demanded R20 billion during the negotiations, and Vodacom countered with R10 million.

With negotiations deadlocked, current Vodacom Group CEO Shameel Joosub was brought in to make a determination. He returned with an offer of R47 million.

Makate rejected the offer, labelling it “shocking” and “an insult”.

Makate once again approached the High Court, this time arguing that Joosub had erred in his calculations.

The High Court ruled in favour of Makate, which Vodacom appealed. The SCA also found in Makate’s favour, leading Vodacom to appeal to the Constitutional Court.

South Africa’s apex court must still rule on whether Vodacom has constitutional grounds on which to appeal, with the first hearing starting on Thursday, 21 November 2024.

MyBroadband contacted Makate’s attorneys for comment, who have acted as his spokesperson for the purposes of the Vodacom case.

They said the matter had been fully ventilated in court and declined to comment further.