Vodacom must offer more than R47m for Please Call Me idea

By Zelda Venter for IOL

In a victory judgment for Please Call Me (PCM) inventor Nkosana Makate the Gauteng High Court, Pretoria on Tuesday found he was shortchanged by Vodacom and that the cellphone giant must go back to the drawing board to come up with a suitable amount.

The court gave Vodacom’s CEO Shameel Joosub one month in which to recalculate what is owed to Makate, using the guidelines issued by the court.

Judge Wendy Hughes made it clear that the calculations used by Joosub earlier in offering Makate R47 million, for what the judge called a brilliant invention, was by far too conservative.

While the judge said Vodacom was in a better position than the court to calculate the true worth of the invention, she gave certain guidelines of what must be taken into account when the amount due to him is recalculated.

Judge Hughes ordered that Makate is entitled to be paid 5% of the total voice revenue generated from the PCM product – starting from March 2001 to March 2021 – and not only for five years, as earlier calculated by Joosub.

She ordered that the total voice revenue must include PCM revenue derived from prepaid, contract (both in bundle and out of bundle) and interconnect fees as set out in Vodacom’s annual financial statements.

“The CEO was disingenuous to project that PCM, as a third party service provider, should only be allocated a duration of five years,” the judge said. She pointed out that Joosub claimed that the R47-million calculation to which he had arrived, was “generous” as well as his conclusion that the invention had generated money for Vodacom over five years.

“The facts demonstrate otherwise. In my view, it is therefore projectable that PCM as a brilliant concept would have had the longevity which it has today. Thus, the eighteen years proposed by Makate (over which time Vodacom has benefitted from PCM) is reasonable and probable.”

The judge added that in regard to the duration to which Vodacom had benefited from the PCM concept, the CEO is to apply the eighteen-year period when he recalculated the amount due to Makate.

As part of his calculations, the CEO must assume that the average call duration of the return calls is two minutes and payment in this respect must not be less than the published Icasa effective rate;

In finding that Vodacom did shortchange Makate, she said he is entitled to 27% of the number of PCM’s sent daily over the years as being revenue generated by the return calls to the PCM.

While it is not yet known what the amount due to Makate will be using the guidelines issued by the court, it will be far more than the R47 million offered to him. Makate, during his application to the high court, said he is owed at least R10-billion.

Makate and Vodacom have been embroiled in litigation over the PCM product for more than two decades.

The Constitutional Court earlier ordered Vodacom to negotiate in good faith and that reasonable compensation had to be paid to Makate for PCM. Unhappy with the R47 million offered to him by the CEO, Makate asked the court to review this amount and to make its own calculations as to which his invention was worth.

But the judge said the CEO is better equipped in making the sums, as he has decades of specialist experience, and is exposed and privy to all the relevant and necessary resources and documents of Vodacom, to compute a reasonable and just compensation for Makate.

Judge Hughes commented that, regrettably, the CEO’s earlier model placed reliance on assumptions which are not backed up by facts or documents.

The judge added that to her, it is clear that Vodacom earlier defied the Constitutional Court order to act and negotiate in good faith.

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