Vodacom is seeking to avoid a potential multibillion-rand payout to Nkosana Makate in the protracted “Please Call Me” legal battle by filing an appeal against a recent court decision.
The mobile operator said on Wednesday it had filed an application for leave to appeal against the Supreme Court of Appeal (SCA) judgment that it must make a new offer to Makate.
SA’s largest network operator argued in its application for leave to appeal to the Constitutional Court that the SCA judgment and order were “fundamentally flawed”.
“It is apparent from the dissenting judgment of the SCA that the majority judgment overlooked or ignored many of the issues between the parties and their evidence and submissions relating to those issues,” Vodacom said in a statement.
The SCA ordered the company to make a new offer to Makate, who has been fighting for recognition and remuneration for his idea, which he said he gave to Vodacom in exchange for a share of the revenue.
The appeal court found that CEO Shameel Joosub made a mistake in limiting the duration of the contract to five years and that he should have taken into account the actual duration of the Please Call Me service — which is 18 years, according to Makate.
Joosub had determined that Makate was entitled to 5% of the Please Call Me revenue for five years, amounting to R47m. Makate challenged Joosub’s determination on several grounds, such as procedural unfairness, nondisclosure of documents, incorrect calculation of Please Call Me volumes, incremental revenue, effective rate and contract duration.
The latest judgment sees two possible increases to Makate’s potential payout.
The first, known as the minority judgment, if implemented, would see Makate’s compensation increased to R189m, based on 18 years of Please Call Me revenue as opposed to Joosub’s initial five years.
The second, majority judgment, if implemented would amount to between R29bn and R69bn, according to court papers seen by Business Day.
But Vodacom contended that the SCA had decided on issues that had not been placed before it for adjudication by either Vodacom or Makate. The company added that the ruling, should it be upheld, would be potentially destabilising to its operations and might sully SA’s image as an investment destination.
The effect would also be felt by employees and shareholders, harm its contribution to public finances and affect network investment and social programmes, Vodacom argued.
It also said the SCA’s majority judgment was selective in choosing Makate’s evidence, as in the case of models for computing compensation to him while ignoring opposing evidence.
Not unexpectedly, the group has focused much of its appeal on disputing the majority judgment.
A payment of R40bn, for example, would equate to being 20% of the group’s market capitalisation of almost R200bn. Vodacom also argues that R40bn would amount to about three years worth of dividends — R13bn-R14bn — that it normally pays to shareholders annually.
Vodacom has battled Makate in court for two decades over compensation for his idea, which gave rise to the service that allows a cellphone user without airtime to send an SMS to request a return call from another subscriber.
Update: February 28 2024
This story contains more details about the Supreme Court of Appeal’s judgment.
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