The recent ruling of South Africa’s Supreme Court of Appeal (SCA) has ordered Vodacom Group Limited, a prominent telecommunications corporation, to pay Kenneth Nkosana Makate, the innovator behind the Please Call Me (PCM) service, a considerable sum estimated to be between 5% to 7.5% of the total revenue derived from the PCM service for a span of 18 years, specifically from March 2001 to March 2021, inclusive of interest.
This verdict, if confirmed, is anticipated to result in significant financial strain for Vodacom, which has expressed serious concerns about the potential operational and financial implications. The mobile communications company warned that the judgment could seriously hamper its functionality going forward and has profound implications beyond its immediate operations.
Vodacom further commented that the potential repercussions would be considerable and far-reaching, affecting its employees and shareholders. It also emphasized that this could have negative impacts on public finance within South Africa, highlighting its own noteworthy contributions to this sphere.
Additional concerns pertained to the potential for the verdict to have detrimental effects on not only Vodacom’s investment in its network and coverage, but also on its social programmes. The repercussions of the ruling were also highlighted as a potential discouragement for foreign investment in South Africa.
Based on the ruling, the compensation owed to Makate, whose idea gave birth to the Please Call Me service, is estimated to fall within the range of R29 billion ($1.5 billion) to R55 billion ($2.8 billion), as per the guidelines provided by the SCA.
Additionally, it is notable that the judgment also grants Makate entitlement to 27% of the daily voice revenue generated from the PCM messages.
In response to the judgment of the SCA, Vodacom, expressing grave concerns about the challenges posed by the ruling, has taken the step of approaching the Constitutional Court with an application to appeal the SCA’s verdict.
Amidst these proceedings, Vodacom has expressed its willingness to continue participating in good faith discussions and negotiations with the key parties involved in order to achieve an agreement on a fair compensation scheme. This willingness to keep dialogue open is apparent alongside its decisive step to challenge the judgement of the Supreme Court of Appeal in the Constitutional Court.
In the backdrop of these developments, it is noted that Vodacom Group’s CEO, Shameel Joosub, had previously extended an offer of R47 million as a compensation package to Makate. This was triggered by an order given by the Constitutional Court in 2016. However, this offer did not achieve acceptance from Makate, who instead opted to apply to the Gauteng division of the High Court seeking to overturn Joosub’s proposed compensation.
In a significant move, on February 8, 2022, the High Court stipulated that Joosub reassess the compensation proposed, thereby dismissing the initial offer. Following this, Vodacom, not satisfied with the High Court’s directives, later that month sought to appeal against the High Court’s judgement and the resulting order.
