Vodacom Group Ltd. and ex-employee Kenneth Makate are set to engage in private talks to settle compensation for his ‘Please Call Me’ service, proposed over two decades ago. South Africa’s Supreme Court of Appeal ruled in February, suggesting a payout between R29 billion and R63 billion, prompting Vodacom to appeal. The dispute, ongoing since the 2000s, reached the Constitutional Court, with Vodacom expressing concerns about potential devastating consequences for its Black economic empowerment structure, Yebo Yethu, should the suggested payout be enforced. Talks are scheduled, aiming for an out-of-court resolution.
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By Loni Prinsloo and Khuleko Siwele
Vodacom Group Ltd. and former employee Kenneth Makate plan to enter private talks to discuss his compensation for a popular call-back phone service he proposed more than two decades ago, hoping to reach an out-of-court settlement.
A February majority judgment by South Africa’s Supreme Court of Appeal would entitle Makate to compensation ranging between 29 billion rand ($1.55 billion) and 63 billion rand, which would have “devastating consequences” for the mobile-network operator, its employees and its investors, the Johannesburg-based Vodacom said in papers filed Feb. 26 to the Constitutional Court to appeal the SCA decision.
The case has gone back and forth for many years as Vodacom and Makate wrangle over compensation for the ‘Please Call Me’ idea he proposed to the company’s product-development team when he worked in the finance division in the 2000s.
Vodacom “asked for private talks and I will surely oblige and engage them,” Makate said in response to questions Monday, adding that talks are planned for Tuesday. He also said he will file opposing papers in the Constitutional Court on Monday.
A 2016 order by the Constitutional Court said Vodacom Chief Executive Officer Shameel Joosub should work out fair compensation, which Joosub calculated at 47 million rand at the time.
Vodacom declined to comment on the matter.
Vodacom, a unit of Vodafone Group Plc, said a payout of the magnitude outlined in the February court decision would collapse its broad-based Black economic empowerment structure known as Yebo Yethu because it would cause a so-called trigger event, where the equity value of Vodacom Group shares falls below the debt in Yebo Yethu, which has about 80,000 Black shareholders.
“The shareholders’ investment in the fund would be wiped out and it would essentially be dissolved,” Vodacom said in the court papers. Makate said Vodacom’s observations about Yebo Yethu were “simply misleading.”
A 40 billion-rand payout would wipe out 20% of Vodacom’s market value, and have “a direct impact” on major institutional shareholders that include the state-controlled Public Investment Corp., which manages government employees’ pension funds and has about 1.3 million active members and 473,000 pensioners, the mobile carrier said.
“Simply put, the harm that the majority judgment would cause to Vodacom goes far beyond the amount of any payment to Mr. Makate,” the company said.
