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Please Call Me’s Nkosana Makate. Picture: Alaister Russell
Please Call Me’s Nkosana Makate. Picture: Alaister Russell

Vodacom says Please Call Me’s Nkosana Makate is not entitled to an “annuity for life” compensation for being the brains behind the free service and that the Supreme Court of Appeal (SCA) ruling on how much Makate should pocket is “fundamentally flawed”.

The telecommunications giant is heading to the Constitutional Court to challenge the SCA’s ruling, which set aside a R47m offer that Vodacom CEO Shameel Joosub made to Makate in 2019.

The SCA instead ordered in February this year that Makate be paid 5%-7.5% of the total voice revenue generated by the Please Call Me service over 18 years from March 2001, including interest.

According to the written arguments submitted this month by Vodacom’s legal representatives Leslie Cohen & Associates, the SCA raising the compensation meant that Makate was entitled to R29bn-R63bn.

However, the company’s CEO  had the discretion of determining the amount payable to Makate since the court had ordered that should Vodacom and Makate fail to agree on a compensation amount, Joosub should determine that amount.

“Mr Joosub’s mandate was … 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.”

The 2001 idea was meant to generate revenue for the company as it planned to charge 15c per Please Call Me. But it was beaten by MTN, which rolled out the free “Call Me” service a month before, forcing Vodacom to also offer Please Call Me for free.

This led to a revenue loss of R25.4m per day.

Incremental revenue

In addition, Makate could not prove that Vodacom experienced an increment in revenue due to the callback service, as it could not determine if each Please Call Me resulted in a callback nor if that call was more profitable.

Makate’s data-mining exercise determined that 27% of the Please Call Me messages received a response, a figure he and the CEO agreed to. However, whether a return call earned incremental revenue was something that concerned the CEO who raised it with Makate’s senior counsel several times, said Vodacom’s legal representative.

Incremental calls are made by the person responding to a Please Call Me message that the person would not have made but for the message.

“The CEO asked counsel to explain how the issue of ‘incremental revenue’ is accommodated in Mr Makate’s model. Counsel answered that he would assume that Mr Makate is entitled only to incremental revenue as a matter of logic.  ‘The difficulty is to calculate it.’ Counsel complained, however, that Vodacom had simply not collected or generated the data and that, as a result, Mr Makate’s team could not estimate the incremental revenue.”

While Vodacom acknowledges that Makate’s idea of the “Buzzing Option” to alert someone to return a call was “brilliant” as it was used to develop the Please Call Me Service, the original idea lost its commercial value due to MTN implementing it first.

In addition, the Please Call Me differed from Makate’s “Buzzing Option” in that he proposed the service be limited to Vodacom customers who had run out of airtime. However, the Please Call Me extended it to all customers regardless of whether they had airtime.

Reasonably compensates

“He envisaged that the service would allow a subscriber to ‘buzz’ someone else, resulting in the registration of a missed call, triggering a return call to the original caller without airtime. Please Call Me, in contrast, was developed by Vodacom’s technology department to send a text message by means of a USSD-based application.

“The premise of Mr Makate’s claim that he is entitled in perpetuity to a percentage of all Vodacom’s Please Call Me revenue is thus misguided. He is entitled to an amount that reasonably compensates him for his idea. He is not entitled to an annuity for life.”

Vodacom’s legal representative has also labelled the SCA judgment as unlawful as the ruling was made in favour of Makate despite no cross-appeal (response to the appellant) by the inventor.

They argued that the SCA instead “cut and pasted” what Makate submitted in his notice to the high court as its own order.

“The majority [court] clearly exceeded its jurisdiction by determining matters that were not before it. Mr Makate did not cross-appeal. The question, of whether the high court should have made the orders Mr Makate sought in his amended notice of motion, was not before the SCA.”

Vodacom further argued that the majority judgment was “fundamentally flawed from beginning to end” and it ignored a list of evidence and issues on Makate’s calculation method for his compensation.

“The majority seems to have been unaware, or disregarded, a long list of serious disputes about Mr Makate’s calculations and a vast body of evidence on those disputes. The record before the SCA ran to about 3,000 pages and the bulk of it was devoted to the disputes between the parties about the proper computation of the compensation payable to Mr Makate.”

The Constitutional Court set November 21 as the date for the appeal application to be heard, which would mark exactly 24 years since Makate submitted his idea to Vodacom.

“The flaws of the majority judgment were moreover not obscure — they were there for all to see. The flaws of the majority judgment are symptomatic of a failure of justice. Section 34 of the constitution assured Vodacom of a fair hearing — not a flawless hearing, but at least a hearing by a fair-minded court that exercises reasonable care to acquaint itself with the issues and evidence before it and adjudicates on them with judicious circumspection. Vodacom did not receive such a hearing,” Vodacom’s lawyers argue.

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