Vodacom warns shareholders of a possible R29b payout to Please Call Me idea-man.

Vodacom is making headlines after it confirmed to its shareholders that it could compensate Please Call Me idea-man Nkosana Makate.

Telecommunications giant Vodacom has seemingly confirmed to its stakeholders that it could pay Please Call Me inventor Nkosana Makate around R29 billion.

Nkosana Makate’s case against Vodacom has been before the courts for years.

VODACOM COULD PAY R29 BILLION IN COMPENSATION TO NKOSANA MAKATE

However, the Supreme Court of Appeal ruled in favour of Makate and ordered Vodacom to pay Makate for his idea. The SCA ordered Vodacom to pay Makate between 5% and 7.5% of the total revenue generated by his service between March 2001 and March 2021.

The SCA also noted that the telecommunications giant should pay interest rates. However, the telecommunications giant is currently appealing the SCA judgement at the Constitutional Court.

Despite tabling an out-of-court settlement with Makate, confirmed reports have it that the two parties failed to find common ground. In its latest financial statement, Vodacom revealed to shareholders that it might be forced to pay at least R29 billion in compensation.

However, depending on the percentage used to calculate the payout, the amount can balloon to R55.37 billion. According to reports, Vodacom generated over R205 billion from the idea in 18 years.

Part of the statement reads, “Consequently, the range of the possible compensation outcomes in this matter is very wide. The amount ultimately payable to Makate is uncertain and will depend on the determination of the Constitutional Court to grant Vodacom’s application for leave to appeal and, if granted, on the success of Vodacom’s appeal against the judgment and order of the SCA, on the merits of the case.”

PRICE HIKES

However, little is known about whether the amount will affect the company’s operations. Earlier this year, Vodacom South Africa announced price hikes on postpaid and fibre tariffs.

The adjustment came into effect in April. Against the new adjusted prices, Mzansi was more than convinced that the telecommunication giant was preparing for Makate’s payday.

However, Makate’s Vodacom case seems to have nothing to do with the price hikes. In recent years, telecommunication providers have made it a norm to regulate their prices as the year begins.

The new price hikes saw an 8% subscription increase for Vodacom contract customers on both Mobile Broadband data plans and Home Internet plans. However, the adjustment equates to an average increase of 4.6% to a customer’s total bill.

Vodacom revealed that a huge investment in network resilience muchly caused the price hikes.