Nkosana Makate has been waiting more than two decades to be rewarded for his “Please call me” idea and now his fight with Vodacom is heading to the Supreme Court of Appeal (SCA) for yet another round.
Vodacom has offered Makate R47m but he says R9bn would be fair.
The mobile operator implemented his concept in February 2001, just three months after he presented it. He came up with the idea after realising that a cellphone he had bought for his then girlfriend, who is now his wife, was useless without airtime.
Makate’s innovation enabled those without airtime to initiate return calls by sending a free text message, which generated previously untapped revenue for Vodacom.
But the company stalled over compensating him, and he sent his first letter of demand in 2007. The dispute went before the courts the following year, and has been there ever since, reaching as high as the Constitutional Court.
“I don’t think my current legal team would want to take a case like mine again, but we are in it and we need to finish it. Vodacom is a massive company with a big balance sheet and they are obviously going to fight very hard,” Makate said.
He said the battle had been stressful. “It is a rollercoaster. At some point you get tired.”
Makate said he has had to learn to manage his stress.
“I’m back to exercising now... And I’m trying to travel more which I had neglected. I’m back to just living. I've reached a point where I say my life still needs to continue. Stress will always be there. With this kind of battle, it stays with you constantly. There are always Vodacom things to interface with … but I have learnt to live with that and cope.”
Although Makate hopes the matter is settled in the SCA, he says he’s ready to go back to the Constitutional Court if needs be. “Personally I don’t see any constitutional point in this matter. All these issues are technical legal matters.”
Makate first went to court in 2008 after Vodacom backtracked on an undertaking to give him a share of profits.
When the dispute ended up in the Constitutional Court, it found in Makate’s favour and in April 2016 ordered the two sides to negotiate “reasonable” compensation. The court said Vodacom was bound by an agreement between Makate and Phillip Geissler, then Vodacom’s director of product development.
The company offered a settlement of R47m, saying it was “overly generous”, but Makate rejected it and went to the North Gauteng High Court.
There, judge Wendy Hughes ruled in Makate’s favour in February and ordered Vodacom make a fresh determination, directing that he is entitled to 5% of the total voice revenue generated from his idea from March 2001 to March 2021.
Vodacom is now appealing that judgment to the SCA. Last week Makate filed responding papers.
Vodacom said this week: “The Constitutional Court did not make a determination on the methodology for the computation of reasonable compensation, but left this to the parties to resolve through dialogue and negotiations.
“In the event of a failure to find a resolution, the court ruled that Vodacom Group’s CEO [Shameel Joosub] would, acting as a deadlock-breaking mechanism, determine the amount of reasonable compensation payable to Mr Makate.”
In papers before the SCA, Vodacom argues that the Pretoria high court erred in setting aside the initial R47m determination made by Joosub. It says it does not accept Makate’s position, which is that he is entitled to 15% of the revenue generated from his idea.
“From his computation, Mr Makate claimed compensation of between R28bn and R110bn. The CEO had to determine the amount. His mandate did not prescribe to him how to determine the amount or what form it should take. It did not say that the amount should be a percentage of the revenue.”
Vodacom said Joosub considered four ways to determine what compensation Makate should receive.
In terms of the “2001 looking-forward model”, Joosub put himself in the shoes of a CEO in 2001 who had to set a compensation amount. The present-day calculation in this model came to R51.5m.
Another method, “an employee reward model” — the method preferred by Vodacom — arrived at R21.8m.
Under the “time value lock model” compensation would be R38.1m and under Vodacom’s “revenue-share model looking backward” it would be R42.2m.
Vodacom says Joosub “considered the outcome of these four models and based his final determination on the average of the two outcomes most favourable to Mr Makate, rounded up to R47m”.
In the event of a failure to find a resolution, the court ruled that Vodacom Group’s CEO [Shameel Joosub] would, acting as a deadlock-breaking mechanism, determine the amount of reasonable compensation payable to Mr Makate
— Vodacom statement
“We submit with respect that Mr Makate’s model is both conceptually and fundamentally flawed. It is conceptually flawed because it does not make any attempt to determine the amount of compensation the CEO would have considered to be fair ... in 2001.”
In his responding papers, Makate rejects Vodacom’s estimate that he is demanding up to R110bn, saying he would accept a “mere 5% of the revenue” generated by his idea. This would amount to about R9bn.
“Vodacom claims the award of R47m is patently inequitable. In truth, the amount... must be viewed in the context of what Vodacom has received,” Makate says.
He argues that R47m is the equivalent of the revenue Vodacom earned from his idea “every 17 days”.
“The invention has been used by Vodacom for approximately 8,000 days,” Makate says.
He dismisses the models used by Joosub, saying the only appropriate model was that of a “revenue share model looking backward”, which he says had been accepted by the court.
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