Table of Contents
Key Points
- Nkosana Makate's legal battle against Vodacom intensifies as Black shareholders oppose a proposed R40 billion ($2.3 billion) payout, citing risks to future earnings.
- Vodacom appeals a Supreme Court ruling directing compensation of R29 billion to R55 billion for Makate’s “Please Call Me” service over 18 years.
- Vodacom warns the SCA ruling could harm operations and investments, affecting employee welfare and South Africa’s investment appeal.
Nkosana Makate, the inventor of the “Please Call Me” service, has encountered another significant hurdle in his ongoing legal battle against Vodacom Group.
The Black shareholders of the telecom giant, have voiced opposition to the proposed R40 billion ($2.3 billion) payout to Makate, arguing it could threaten their investment and future earnings in the group, which has a market cap of $13.3 billion on the Johannesburg Stock Exchange.
The group, which holds a minority stake in Vodacom through the YeboYethu initiative — a program launched in 2008 to boost Black ownership — seeks permission from the Constitutional Court to join Vodacom's appeal. This request highlights concerns that the payout could reduce returns and hinder efforts to increase Black representation in South Africa’s corporate sector.
Ongoing legal tensions
This development comes nearly seven months after Vodacom escalated its legal confrontation with Makate, appealing to the Constitutional Court following a ruling from the Supreme Court of Appeal (SCA) that favored him.
The SCA directed Vodacom to compensate Makate between 5-10 percent of the revenue generated by the “Please Call Me” service over the past 18 years, with potential compensation ranging from R29 billion ($1.66 billion) to R55 billion ($3.16 billion).
Vodacom faces risks after court ruling
The SCA's ruling is a major win for Makate after years of litigation. Makate, who developed the “Please Call Me” service while at Vodacom, claims the idea of allowing users to send free messages to request calls was entirely his. His legal battle began in 2008 when he sought a 15 percent share of the R70 billion ($4.74 billion) he alleges the service generated for Vodacom.
In response, Vodacom expressed concerns about the implications of the SCA’s judgment, calling parts of the decision “unintelligible, incomprehensible, and vague.” The company warns that a potential payout could harm various aspects of its operations, including employee welfare and investment in network infrastructure.
CEO Shameel Joosub highlighted the far-reaching consequences of the SCA’s compensation order, stating that if upheld, it could negatively impact Vodacom’s performance and South Africa’s attractiveness as an investment destination.
