Vodacom, a leading African mobile company, is allegedly in discussions with a former employee, Kenneth Makate, seeking an out-of-court settlement over the “Please Call Me” phone service dispute. According to Makate, Vodacom has initiated private talks, which he is agreeable to.
This development comes in the wake of a ruling by South Africa’s Supreme Court of Appeal that Vodacom Group Limited owes Makate between 5% to 7.5% of its total revenue from the “Please Call Me” (PCM) service, spanning 18 years from March 2001 to March 2021, plus accrued interest.
Based on this ruling, Makate’s compensation could range from R29 billion ($1.5 billion) to R55 billion ($2.8 billion). He would also be entitled to 27% of the voice revenue earned from PCM messages.
Kenneth Makate, who was previously an employee of Vodacom’s finance department, proposed the “Please Call Me” phone service idea to the company’s production development team more than 20 years ago.
The PCM conflict, which originated in 2008 after Vodacom allegedly reneged on its promise, has been ongoing without resolution since then. Vodacom has claimed that it has tried to negotiate in the past, but to no avail.
Despite previously rejecting the recent ruling and petitioning South Africa’s Constitutional Court for permission to appeal the Supreme Court’s decision, Vodacom is now seeking to resolve the dispute outside of the court. Makate is scheduled to submit opposing documents to the Constitutional Court this week.
Nonetheless, a report disclosed that the company showed readiness for a good faith dialogue and negotiations for a fair compensation, independently of its ongoing appeal process in the Constitutional Court.
Vodacom has voiced concerns that if the February court judgement is upheld, it will have a profound impact on various aspects of its operations. These include implications for the company’s employees and shareholders, public finances in the country, network investment, coverage, and social programs.
Back in 2016, following a court order, Vodacom CEO Shameel Joosub had estimated Makate’s compensation to be 47 million rand. However, this offer was nullified by the recent February ruling from the Supreme Court of Appeal.
Another significant implication of a payout as outlined in the February court ruling resides in its impact on Yebo Yethu, Vodacom’s black economic empowerment structure. This structure has about 80,000 black shareholders, who stand to be affected should the equity value of Vodacom Group shares dip below the debt in Yebo Yethu.
Consequently, if the court’s decision is indeed upheld, Vodacom has stated that the shareholders’ investment in the Yebo Yethu fund “would be wiped out,” leading to the fund’s essential dissolution.
