Vodacom’s latest Please Call Me warning
Vodacom’s YeboYethu BEE scheme has applied to the Constitutional Court to become a friend of the court in the ongoing Please Call Me saga, warning that a payout from the mobile operator will hit black shareholders.
YeboYethu is Vodacom’s empowerment scheme that pays out regular dividends to black shareholders.
According to the Sunday Times, the scheme’s CEO, should Vodacom be forced to pay out the billions of rands demanded by Kenneth Makate in the Please Call Me case, it would have dire consequences for the scheme and its shareholders and may ultimately lead to its ultimate demise.
The group and the YeboYethu Investment Company say they will be materially impacted by the ruling by the Constitutional Court, hence the application. The late application was justified in that they only became aware of the full impact of a possible payout to Makate in June,
YeboYethu is just the latest Vodacom-linked entity to try and get in on the case, with the group’s biggest shareholder, Vodafone, attempting the same at the end of June.
However, the Constitutional Court shot this application down earlier in Septemeber.
The ongoing saga
Vodacom has been fighting a decades-long battle over the Please Call Me service, which Makate brought forward. Makate is seeking fair compensation for the idea.
According to Makate, he had an idea for a free missed-call service that he shared with his superior at Vodacom in 2001. The service aimed to allow customers to get their contacts’ attention without using airtime.
As reported by Daily Investor, Vodacom launched the service, known as Please Call Me, in March 2001, and it became widely used across South Africa.
Makate then launched a lengthy legal battle against Vodacom in 2008, seeking compensation for his idea.
Makate’s legal team had initially demanded R20 billion to compensate him for his idea, based on a calculation that the Please Call Me product had generated R205 billion in revenue since its implementation.
Vodacom did not share Makate’s views on how much revenue the service generated or how much he deserved. The courts, however, sided with Makate on the matter.
After being ordered to fairly compensate Makate for his idea, Vodacom initially offered him R10 million. Makate rejected this offer, and Vodacom CEO Shameel Joosub’s team then constructed four models to estimate how much Makate should get based on different scenarios.
After averaging the two models with the highest values, he came up with an offer of R47 million. However, Makate rejected this as well, and the matter again ended up in court.
Makate approached the High Court, and in February 2024, the court ruled in his favour. Vodacom appealed this ruling at the Supreme Court of Appeal.
However, the Supreme Court dismissed Vodacom’s appeal and ordered the company to compensate Makate between 5% and 7.5% of the revenue generated by the service over 18 years.
According to MyBroadband’s analysis, this ranges from R28.99 billion to R55.37 billion using the models accepted by the court.
Vodacom noted in March that it was on the hook for between R40 billion and R63 billion, based on this order.
However, a twist in June—where Makate’s legal team opposed Vodacom’s majority shareholder, Vodafone, from joining proceedings—revealed that he was ‘only’ seeking the compensation claimed in 2020, which was R9.7 billion.
He said his claim from 2020 still stands – R9.7 billion.
Loading ...