Nicola Mawson
YeboYethu, an investment vehicle initially set up by Vodacom in 2018 to empower its staff members, will also be going to the Constitutional Court when the Please Call Me matter, a legal case that has been ongoing since 2008, is set to be heard.
Vodacom is asking the apex court for leave to appeal a Supreme Court of Appeal (SCA) decision handed down in February that South Africa’s largest mobile operator should pay Please Call Me inventor, Nkosana Makate, what could work out to be an amount of between R29 billion and R63bn. Vodacom’s stock is worth R230bn on the JSE.
YeboYethu now wants to join the matter as an independent amicus curiae to provide the court with expertise on the matter. It argues in court papers that “payment of compensation in such a high amount would have disastrous consequences for YeboYethu Investment Company”.
YeboYethu, which was capitalised in 2008 through the ring-fencing of 3.44% in Vodacom shares worth R7.5bn, said in its papers that – if Vodacom is forced to pay R40bn – this “would likely suspend the payment of dividends to some 80 000 black indirect shareholders of Vodacom for many years”.
The empowerment vehicle earns money for its investors through Vodacom’s payment of dividends. Investors can buy into Vodacom indirectly through YeboYethu at a share price of R25 compared to Vodacom’s share price of R110.
Moreover, YeboYethu said, “such payment would lead to trigger events for the purposes of the preference share arrangements … and could commence the demise of YeboYethu and YeboYethu Investment Company”.
Its court papers add: “Years of effort made to achieve the objectives of the B-BBEE empowerment legislation through YeboYethu would be diminished by a single judgment of the SCA.”
Makate was working for Vodacom as a trainee accountant when, in 2001, he came up with the idea that a cellphone user with no airtime could send a request to another user with airtime to call them.
Vodacom turned the idea into a solution, which proved to be successful as its customers – pre- or post-paid – would return the calls. A previous offer of a R47 million settlement by Vodacom was summarily rejected by Makate.
When asked for comment, Makate told Business Report that he was surprised by the move as all Vodacom’s stakeholders have known about the financial impact of the liability since 2015. He said it was “rather surprising that an application of this nature was not brought then”.
Makate added that, because YeboYethu was a shareholder, it could not apply to be an amicus curiae as it was not independent.
“It does not make sense why would they apply now when the case has been in litigation for over 15 years,” he said.
The matter has been through several courts, with initial hearings revolving around whether there was a contract between the parties, before the Constitutional Court found some years ago that there was an agreement and the parties should negotiate an amount, which saw it revert to the Gauteng High Court, Pretoria, before again going through a process of appeals.
In February, the SCA noted that it was displeased that the matter had been dragging on for so long “with Vodacom not playing open cards with Makate on the necessary information until ordered to do so by the CEO significantly later in the hearing, to some extent, after pre-hearing negotiations had failed. This delay can safely be laid at the doorstep of Vodacom.”
The Constitutional Court has not yet set down a date for the hearing to commence. However, written arguments must be lodged no later than October 17.
Vodacom declined to comment to queries from Business Report.
BUSINESS REPORT