"Please Call Me" Idea Creator Declines Vodacom's R20 Billion Offer
Nkosana Kenneth Makate has presented to the Constitutional Court his willingness to accept R9.4 billion from Vodacom as compensation for his “buzzing option” concept, foregoing the 18 years of interest as mandated by the Supreme Court of Appeal (SCA).
This response counters Vodacom’s appeal to the apex court, which aims to overturn earlier decisions made by both the High Court and the SCA that favored Makate. In an alternative move, Vodacom has requested that the Constitutional Court refer the matter back to the SCA with a different panel of judges.
The dispute has once again reached the Constitutional Court due to a lack of agreement between Vodacom and Makate on a fair compensation amount for Makate’s idea, which was instrumental in developing the Please Call Me service in 2001.
Vodacom argues that Makate’s original idea was different from the eventual implementation of Please Call Me, stating that his concept revolved around sending a missed call to “buzz” a cellphone without any airtime.
Additionally, Vodacom contends that Makate’s idea lost its relevance when MTN introduced its “Call Me” service for free in January 2001, while Vodacom had originally intended to charge 15 cents per message.
Makate rebuts this assertion, highlighting that Vodacom continues to offer Please Call Me, which demonstrates the idea's lasting value.
In 2016, after enduring numerous legal hurdles, the Constitutional Court ruled in favor of Makate and instructed both parties to negotiate a fair compensation in good faith. This ruling disregarded the discussions regarding the novelty and practicality of his concept and the earlier launch by MTN.
The court recognized a verbal agreement for compensation between Makate and Vodacom, appointing Vodacom CEO Shameel Joosub as the decision-maker in case of disputes.
Initially, Makate sought R20 billion, while Vodacom offered a mere R10 million. Following a prolonged legal battle, Joosub suggested R47 million, which Makate deemed “shocking” and “an insult.”
Makate later escalated the matter to the High Court, which ruled in his favor. Vodacom's appeal to the Supreme Court of Appeal also fell short, with the SCA ordering Vodacom to pay Makate between 5% and 7.5% of the revenue generated by Please Call Me over 18 years, along with interest.
The SCA directed Vodacom to utilize Makate’s financial models to determine the revenue generated, without specifying which model should be adopted.
Vodacom has since appealed to the Constitutional Court, arguing that the SCA’s ruling was vague and unworkable. They claim that the compensation mandated could fall between R29 billion and R63 billion, representing 12% to 27% of their market capitalization, an amount they deem excessive.
In response, Makate disputes Vodacom’s figures, asserting that R9.4 billion would be a reasonable and manageable sum considering Vodacom's R200 billion market cap and its backing from Vodafone.
His court documents also noted that Vodafone’s 65% ownership in Vodacom would likely mitigate any financial burden from the R9.4 billion payout.
Makate’s submission included an agreement to a 5% revenue share, although he did not completely relinquish the mora interest granted by the SCA. His legal team argued that Vodacom’s counsel accepted that mora interest should start accruing from January 18, 2019, at 10.25%, which could add several billion rands to the final total.
Conversely, Vodacom contested the revenue figures from Makate’s model, stating that it generated R221.2 billion in voice revenue from 2002 to 2017, suggesting that Makate's claim represented an inflated percentage of Vodacom's overall voice revenue.
Vodacom clarified that they provided precise figures to Makate’s legal team, excluding international calls, roaming, and bundled minutes for contract customers.
The Constitutional Court’s ruling has the potential to resolve a prolonged dispute between Makate and Vodacom regarding the true worth and significance of the Please Call Me service.