Cellular3.02.2025

Confusion over how much Makate wants to be paid for Please Call Me idea

Vodacom South Africa says it remains unclear whether Nkosana Kenneth Makate wants to claim interest on the R9.4 billion compensation he has demanded for his “buzzing option” idea.

The company’s quarterly financial results, published on Monday, provided shareholders with an update on the Please Call Me case.

Vodacom explained that it applied to the Constitutional Court for permission to appeal a Supreme Court of Appeal (SCA) ruling in favour of Makate last year.

This was after the Supreme Court ordered in February 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.

Somewhat complicating matters was that the Supreme Court ruling was close, with the panel of five judges split 3–2.

While the minority agreed that Vodacom should recalculate the compensation owed to Makate over 18 years, it ruled that this should be done according to the models used by Vodacom CEO Shameel Joosub.

According to Vodacom, the minority judgement’s determination would have come to a total compensation of R186 million.

The compensation ordered by the majority judgment is over 100 times more than that.

Based on Makate’s previous court papers, his models show that the capital amount alone was R9.7 billion when calculated using 5% revenue share, growing to almost R29 billion when adding mora interest.

Assuming a 7.5% revenue share, the amount balloons to R63 billion with interest.

However, Makate said in his responding papers to the Constitutional Court when the SCA’s order is properly interpreted, and the correct variables are substituted, the payment due from Vodacom amounted to R9.4 billion.

Vodacom has raised questions about this statement from Makate. It said it was unclear whether Makate wanted R9.4 billion in total, or whether mora interest still had to be added.

“The minority judgment of the SCA raised Mr Makate’s compensation to approximately R186 million, while the SCA majority judgment would entitle Mr Makate to a minimum compensation amount of R29 billion,” Vodacom stated.

It noted that Joosub’s determination in 2019 was that Makate should be paid compensation of R47 million.

“Makate, in his submissions to the Constitutional Court stated that his request is for compensation in the capital amount of R9.4 billion plus possibly mora interest from 18 January 2019,” said Vodacom.

“Consequently, the range of the possible compensation outcomes in this matter is very wide.”

MyBroadband calculated the mora interest on R9.4 billion from 18 January 2019 to 3 February 2025, and it would increase the total compensation to almost R16.6 billion.

Makate’s Model 9B as per annexure NM31 in his Supreme Court papers

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.

On 26 August 2024, the Constitutional Court issued a directive that it would hear Vodacom’s application for leave to appeal, in tandem with its appeal.

The matter was heard on 21 November 2024, and the Constitutional Court’s decision is pending.

MyBroadband asked Makate’s legal representatives for clarity regarding his R9.4 billion claim, why it is less than the R9.7 billion capital amount in the Supreme Court papers, and whether he would pursue mora interest.

They declined to answer, saying the issue had already been ventilated in court and added that they would no longer be communicating with MyBroadband.

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