Large Please Call Me payment would hit BEE, Yebo Yethu tells court

Vodacom’s empowerment vehicle aims to put its weight behind the mobile operator in the long-running Please Call Me matter.

It is the latest in the 16-year legal dispute with erstwhile employee Nkosana Makate, who is demanding a multibillion-rand payout. 

In recent years, the fight has evolved beyond whether the former Vodacom employee invented the service. Rather, legal action in the latter half of the battle has been premised on how much Makate is owed for his contribution. 

The company’s BEE unit Yebo Yethu filed a motion with the Constitutional Court to be admitted as a “friend of the court”, arguing that a too large payment to Makate would cripple the group’s empowerments efforts, cutting off thousands of black shareholders. 

In February, the mobile operator filed an application for leave to appeal against the Supreme Court of Appeal (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 includes two possible increases to Makate’s potential payout. The minority judgment would raise Makate’s compensation to about R186m, while the majority judgment would entitle the inventor to a minimum of R29bn.

“The issue is what compensation is ‘reasonable’ in the circumstances. If the decision of the SCA is upheld, there will be significant adverse implications for YeboYethu, YeboYethu Investment Co and its 80,000 black shareholders,” said Thabo Mokgatlha, chair of Vodacom’s BEE scheme, in court papers seen by Business Day.

Mokgatlha said that such an award was “likely [to] be the end of these companies and the empowerment scheme, and those black individual investors will forfeit their investments and the opportunity for future earnings, thereby undermining the very basis for the existence of the BEE scheme, which is to promote the achievement of the constitutional right to equality, increase participation of black people in the economy and promote a more equitable income distribution”.

Upholding the majority SCA judgment “will go against these objectives, as the empowerment scheme will collapse” he said. 

Yebo Yethu holds a 5.51% stake in Vodacom.

By the full year ended March, the scheme was valued at R11.3bn. Dividends received from Vodacom Group, the scheme’s main revenue line, was R726.8m for the period, compared with R881.3m in the prior year. 

Vodacom’s UK parent, Vodafone, has attempted to be admitted as a friend of the court, but it was rejected earlier in September.

gavazam@businesslive.co.za