Vodacom’s out-of-court settlement with Please Call Me inventor Nkosana Makate has reduced the group’s interim earnings.
While full details of the settlement will likely be revealed when the company reports its interim results on Monday, preliminary calculations indicate the amount being as high as R748m.
On October 31 the group said earnings per share (EPS) for the period are expected to increase 40%-45% to a range of 496c-513c. Headline earnings per share (HEPS) are expected to rise by a similar percentage range.
On Thursday SA’s largest mobile operator issued an updated trading statement of its half-year performance to end-September. Vodacom simply said this was due to a “one-off cost”.
EPS is now expected to increase by between 30% and 40%, a range of 460c-496c for the period. Again, HEPS are expected to rise by a similar percentage range. This works out to a variance of 17c on the high end of the range and 36c on the low end.
The group has 2,077,841,204 shares in issue. This works out to a cut in earnings of between R353.2m and R748.02m.
On Wednesday SA’s largest mobile operator told shareholders its board had approved a settlement agreement, and the matter had been settled by the parties out of court for an undisclosed sum.
In recent years the fight evolved beyond whether the former Vodacom employee invented the service. Legal action in the latter half of the battle was premised on how much Makate was owed for his contribution.
‘Accounted for’
For now, the JSE-listed group has simply said the settlement “has been accounted for” in its results for the six months to end-September.
As part of the settlement process, a notice was sent to the Supreme Court of Appeal (SCA) withdrawing Vodacom’s appeal. Additionally, a notice was sent to the high court to abandon the February 8 2022 judgment.
In February, the mobile operator filed an application for leave to appeal against the SCA judgment that it must make a new offer to Makate.
Vodacom argued in its application for leave to appeal to the Constitutional Court that the SCA judgment and order were “fundamentally flawed”.
The judgment saw two possible increases to Makate’s potential payout. The minority judgment of the SCA would have raised Makate’s compensation to about R186m, while the majority judgment would have entitled the inventor to a minimum amount of R29bn.
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