Vodacom should pay Makate R3.12 million for his idea

Vodacom CEO Shameel Joosub may have thought he was being generous in resolving the long-running “Please Call Me” dispute with former employee Nkosana Makate. Instead, his decision backfired.

Instead of treating Makate like someone who presented an idea to Vodacom, worth a maximum of R1 million (R3.12 million with inflation from 2001 to 2025), he offered him R47 million.

To understand the mistake, one must consider the first Constitutional Court ruling after a prolonged legal battle about payment for his Buzz idea.

The Constitutional Court ordered Vodacom and Makate’s teams to negotiate reasonable compensation in good faith. It designated Joosub as the deadlock-breaker.

Initial negotiations ended in deadlock, resulting in Joosub offering Makate R47 million as compensation for his invention.

Vodacom and Joosub did everything by the book and followed the guidance of the Constitutional Court to the letter.

However, in the R47 million offer to Makate, Joosub and Vodacom’s legal team was far too generous and opened the door for the legal mess that followed.

Joosub revealed that it used four models to determine compensation for Makate.

• A 2001 looking forward model, resulting in R51.5 million of compensation.
• An employee model, resulting in R21.8 million in compensation.
• A Time Value Lock (TVL) model, resulting in R38.1 million in compensation.
• A revenue share model, resulting in R42.2 million in compensation.

He then used the two most favourable models and averaged the present-day outcomes to reach the R47 million offer to Makate.

The revenue sharing model retrospectively determined what Vodacom would have paid Makate for using his idea under a five-year contract concluded in 2001.

This is the business model which Vodacom used to negotiate compensation for a third-party service provider.

Unsurprisingly, Makate jumped on this model even though, unlike a service provider, he did not design, fund, or implement Please Call Me.

He argued that he was owed a percentage of revenue from Please Call Me, and ignored the other options highlighted by Joosub.

After a lengthy legal battle, the Constitutional Court ruled in 2016 that Makate was entitled to “reasonable compensation”.

The case then shifted to determining what constituted a fair amount. In 2024, the SCA sided with Makate, ruling that he should receive a percentage of the revenue generated by the service.

The High Court and the Supreme Court of Appeal (SCA) agreed and ruled that Makate was entitled to a share of revenue equating to between R29 billion and R55 billion.

Vodacom challenged this amount and obtained a victory in the Constitutional Court, who overturned a 2024 SCA ruling that ordered the company to pay him between 5% and 7.5% of revenue generated from the service over 18 years.

What Please Call Me’s Nkosana Makate should have been offered

Although hindsight is a perfect science, the true Please Call Me inventor, Ari Kahn, has consistently highlighted that Makate did nothing more than come up with an idea.

He said Makate is not the originator of the service. If he did not come up with the idea, Vodacom would still have copied MTN to launch the service.

Kahn highlighted that Makate’s Buzz idea, allowing a user without airtime to dial a phone number and give a missed call, was not technically possible.

He explained that a mobile call could only mature to a ringing state if the user had credit on their account.

Consequently, the proposal did not progress beyond an idea. Even skilled engineers at Vodacom could not reduce it to practice.

This is why there is a clear distinction between ideas and inventions. Inventions are required by law to be reduced to practice.

Kahn said Makate’s proposal was completely different from the Please Call Me service, which Vodacom implemented.

What is clear is that Makate did present Vodacom with an idea, which the company valued. It may have even helped it to develop the service slightly faster.

Vodacom has a rand value for ideas. It runs an Ideation programme to encourage employees to come up with ideas to help the company.

An exceptional idea which produces great value for the company will earn the employee up to R1 million, after tax.

This is precisely what Makate offered Vodacom – an idea. He was not a service provider who could negotiate a revenue share contract.

This means that a reasonable offer to Makate for his idea would be R3.12 million, considering inflation over the last 24 years.

This is an opinion piece and does not necessarily reflect the views of Newsday.