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SCA rejects Vodacom’s appeal and orders an increased pay-out to Please Call Me inventor

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Johnathan Paoli

THE Supreme Court of Appeal has rejected the appeal brought by Vodacom against Please Call Me inventor Nkosana Makate.

The court on Tuesday ordered the mobile network to pay Makate between 5% and 7.5% of the total revenue generated over 18 years, plus interest.

Makate’s legal team calculated that based on a 5% share of Vodacom’s estimated R205 billion in revenue over 18 years comes, a sum of R20 billion is owed by Vodacom, which is double what the company invests into its South African network every year in capital expenditure and over 10% of its entire market capitalisation, which is currently around the figure of R197 billion.

Makate, a Vodacom finance manager at the time, pitched his idea of a method to “buzz” someone’s phone without airtime to a superior on 21 November 2000, with his idea ultimately being developed into a service which launched on the Vodacom network in 2001.

Vodacom’s appeal is the latest in a winding legal journey from the High Court to the Constitutional Court, then back to the High Court and Supreme Court.

Makate sent his first letter of demand in 2007 and launched legal action against Vodacom in 2008, leading to a legal battle for over 15 years.

Judge Wendy Hughes ruled in April 2022 that Vodacom could appeal her order against the R47 million the company had offered Makate in compensation and said that Vodacom CEO Shameel Joosub used the wrong model to determine the compensation and ordered that he recalculate it.

The Constitutional Court ordered Vodacom and Makate to negotiate in good faith to determine a fair amount to pay for the idea, and further ordered that if the negotiations resulted in a deadlock, the company CEO would act as the tie-breaker and come up with a “reasonable compensation” amount.

Vodacom said that Joosub considered four different models that could have been used to determine Makate’s compensation with the R47 million offer being the average of the two most favourable outcomes.

However, Makate has claimed that he is entitled to anything from 5% to 15% of the revenue Vodacom generated from Please Call Me, which has been reported as anything from R9 billion to R110 billion.

The SCA found in his favour.

“It would have been an eminently un-businesslike and an unreasonable decision by the CEO not to have extended the contract it made with Makate. As such, this Court determined that the valuation was flawed and inequitable,” the SCA found.

Vodacom has expressed its intention to appeal the judgement at the country’s apex court and said that it was surprised and disappointed with the SCA’s ruling.

Meanwhile, Vodacom’s rival, MTN has further complicated the matter, with a competing claim over inventing the call-back service.

This debate was sparked when Ari Kahn, a former MTN contractor, said in a radio interview that Makate did not have rights to the service and was thus not deserving of compensation.

Kahn said he filed a patent on a “please call me”-type innovation on behalf of MTN, beating Makate in claiming the rights to the service when Vodacom launched it in March 2001.

Arguably, the debate about the true inventor does not take into consideration that there are two different “please call me-type” services that were launched by two competing telecommunications giants.

It remains unconfirmed on which principle or point of law the telecommunications company will base its appeal to the Constitutional Court.

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