Vodacom ordered to come clean on Please Call Me revenue

The High Court in Pretoria has ordered Vodacom to play open cards and disclose financial records relating to the Please Call Me service including, among other things, the revenue it has generated for the telecommunications giant.

This is a victory for Please Call Me inventor, Nkosana Makate, who will use the financial records to determine the settlement that Vodacom could shell out for his idea that gave rise to the service.

Please Call Me enables a user without airtime to send a text to be called back by another subscriber. Makate has battled Vodacom in court for more than a decade for compensation for inventing the service when he was a trainee accountant at the company in November 2001. Vodacom officially launched the service in March 2001.

On Monday 29 June, Judge Jody Kollapen gave Vodacom 21 days to hand over financial records to Makate relating to the underlying revenue that Please Call Me has generated for the company between 1997 and 2000, and information about the growth of its customer numbers and its mobile services spending as a result of launching the service.

The Constitutional Court affirmed in 2016 that Makate is the inventor of Please Call Me and ordered Vodacom to enter into good faith negotiations with him to determine reasonable compensation. However, compensation talks between Makate and Vodacom have been acrimonious as he accused the company of deliberately withholding information about the lucrativeness of Please Call Me.

High court application 

Makate approached the High Court in Pretoria to compel Vodacom to open its financial books on Please Call Me – in terms of Rule 53 and 35 (14) of the Uniform Rules of Court, which deal with the disclosure of information and reviewing decisions of courts.

Kollapen ruled that the “method of determining the compensation and the revenue base to be used are central to the dispute between the parties”, thus Rule 53 and 31 apply to Makate’s court application.

“It appears, in the context of the relief sought perfectly compatible in principle for the provisions of rule 53 to live alongside those of rule 35 (14), and while in practice, the provisions of rule 35(14) are generally activated once all the affidavits are in, there is no bar to its use at an early stage of the proceedings especially where the issues in dispute can be reasonably contemplated or are clearly defined as is the case in these proceedings,” Kollapen wrote in his judgment.

He ordered Vodacom to hand over copies of contracts that it entered into with other service providers – including those involving prepaid recharge, prepaid public phones, bulk messaging, and others – to determine how the company structured its revenue share agreement with the service providers.

Makate believes Vodacom paid service providers based on the revenue that their service generated for the company and earned between 26% to 28% of the revenue. He wants a similar revenue share arrangement for determining his compensation for inventing Please Call Me.

Vodacom responds

A Vodacom spokesperson said the company is reviewing Kollapen’s judgment “whereafter a decision on appropriate next steps, including the possibility of an appeal [against the judgment], will be taken”.

On 9 January 2019, Vodacom Group CEO Shameel Joosub offered Makate R47-million in compensation for the Please Call Me service.  Joosub’s involvement in settlement talks is part of the Constitutional Court’s order that enabled him to arbitrate negotiations after a deadlock on compensation materialised.

Makate rejected Joosub’s offer, saying he is entitled to at least R20-billion because his team of legal and technology experts calculated that Vodacom generated R205-billion from Please Call Me in call revenue from March 2001 to 2020 (a forecast), which excludes advertising revenue linked to the service. He wants 5% of the total revenue Please Call Me generated for Vodacom plus interest accrued. 

Makate has launched a separate court process to review Joosub’s offer, which is set to start at a later stage.

Said the Vodacom spokesperson: “Our position on this matter is consistent in that we have repeatedly stated our willingness to pay Mr Makate a substantial amount. Vodacom still holds the view that it entered into negotiations and negotiated with Mr Makate and his team in good faith, in accordance with the Order of the Constitutional Court.”

Kollapen also ordered Vodacom to disclose specific paragraphs of a KPMG forensic investigation report from November 2008 that investigated allegations from two whistle-blowers about the company’s alleged poor governance and intellectual property issues.  

Makate believes that the report contains crucial information that will help him get paid for Please Call Me. BM/DM