Authored By: Taona Chiteme
Eduvos
The extensive legal dispute between Vodacom (Pty) Limited, a South African telecommunications giant, and former employee Mr Nkosana Kenneth Makate regarding the invention, development, and commercialisation of the “Please Call Me (PCM) “service symbolises one of the most complex, fiercely contested, and jurisprudentially extensive corporate litigation cases to ever be undertaken throughout South Africa’s legal history. What makes it such a remarkable landmark case is that it established it’s precedence through its engagement with every level of South Africa’s judicial system, creating room for extensive debate around the nation’s intellectual property laws, civil procedures, administrative laws, contractual laws and agency, and respective applications of estoppel and prescription, as per the Prescription Act 69 of 1969.
This extensive dispute has arisen from as far as the early 2000s, in early post-apartheid South Africa, where optimism and aspirations for a better future triumphed the expansion of mobile telecommunications infrastructure throughout South Africa. During this time, specifically November 2000, Nkosana Kenneth Makate was employed by Vodacom as a trainee accountant. Around this time, the lion’s share of the telecommunications market was held by prepaid users, who frequently depleted their airtime balances due to the pronounced sense of urgency in needing to communicate. With due consideration of these market dynamics, Makate envisaged a service that would allow a user with a zero-airtime balance to send a free, automated text message to another user to request a phone call.
From the onset, Makate faced significant adversity from an intellectual property perspective. Firstly, South Africa’s Patents Act 57 of 1978 does not include mere discoveries and presentations of information, and the act is only attentive to the notion of absolute novelty. Because Please Call Me as a concept, which relies heavily on Unstructured Supplementary Service Data, this invalidated it’s novelty, which made it difficult for Makate to patent the business method of the service. This means that commercialisation of the service, and avenue for reward lays as a contractual issue rather than that of intellectual property.
Makate formalised the Please Call Me concept in a written memorandum, which he presented to his immediate superior, Lazarus Muchenje, who would later refer him to Philip Geissler, then Director of Product Development and Management at Vodacom. Makate’s subsequent legal contest would arise from an oral agreement he had concluded with Geissler regarding compensation for the product after thorough assessment of it’s technical and commercial liability by the company. There was also further email correspondence to this effect, which included Geissler’s reiteration that as an employee, helping the telecommunications corporation come up with ideas to reach it’s goals is part of normal business. However, he promised to approach the CEO at the time, Alan Knott-Craig, on Makate’s behalf as the final arbiter to determine reasonable compensation following the success of the service.After the service was officially launched in March 2001 and generated billions of rands for Vodacom over the subsequent years, Makate never received a cent as promised by executives at the corporation. This led him to enquire internally with executives, however, after continuous corporate stalling and empty promises, Nkosana Makate would later resign from the telecoms giant and initiate formal legal action, realising that they had no intention of honouring their oral agreement with him.
The first wave of legal pleadings spanned from the issuance of summons in 2008 all the way to the landmark judgement in 2016. These proceedings were concerned with fundamental contractual principles rather than questions of compensation. These raised questions of whether a valid contract existed, whether a corporate agent could bind the principal to this agreement, and whether or not there was an effluxion of time regarding the plaintiff’s claim. The proceedings began in the Gauteng Local Division of the High Court, Johannesburg. In Makate vs Vodacom (Pty) Limited ZAGPJHC, the court accepted that the oral agreement between Makate and Geissler had been concluded, considering the terms alleged by Makate that Geissler possessed the ostensible authority to bind Vodacom to their agreement. However, Vodacom denied this, raising a special plea of prescription against Makate’s claim as per the Prescription Act 68 of 1969, citing sections 10(1), 11(d), and 129(d). These pleadings proved unsuccessful for Makate, considering that the period between the launch of the Please Call Me service, and the instituted pleadings had long exceeded the three-year prescriptive threshold. His claim was dismissed by the High Court, and subsequently denied leave to appeal, prompting him to approach the Constitutional Court of South Africa to act as a final arbiter.
The Constitutional Court of South Africa intervened in April 2016 by overturning the High Court’s decision in Makate v Vodacom (Pty) Limited ZACC 13, the court dismissed the trial court’s approach as highly legally flawed and excessively formalistic. The court furthermore, specifically clarified ostensible authority as the power to act on behalf of a principal as it appears to others, even to the extent that an agent may mislead a third party into believing that he or she has authority even when not explicitly conferred by the principal. Despite the trial court’s dismissal of presumed authority due to the lack of a replication, the Constitutional Court reviewed Vodacom’s internal corporate structure, and delegation of product development to Geissler indeed conferred upon him the ostensible authority to enter into the revenue-sharing agreement. Furthermore, the Constitutional Court overturned Vodacom’s special plea, asserting that Makate’s claim is a contractual right to compel Vodacom to engage in good faith negotiations to determine a reasonable share of revenue, and therefore did not constitute a “debt” to be claimed from the telecoms corporation, which would be subject to a prescription period according to the Prescription Act. The Constitutional Court further asserted Section 34 of the Constitution, which grants a citizen of the Republic the right to access courts, emphasizing that the extinctive prescription raised by Vodacom unfairly limited Makate’s rights to access justice. The Constitutional Court finally issued a mandatory interdict binding Vodacom to the agreement concluded by Makate and Geissler, ordering the company to commence negotiations in good faith immediately to determine compensation.
Subsequent to the 2016 Constitutional Court order, the parties commenced negotiations, with the CEO, Shameel Joosub, legally appointed as the deadlock breaker between the parties. This commenced the second phase of litigation. However, clashes begun regarding the amount in compensation. Makate entered the negotiations, making use of aggressive revenue-sharing models, proposing a settlement to the eye-watering value of R20.2 Billion, with interest accrued. The overarching motivation behind this colossal figure was the original verbal agreement, where he was entitled to 15% of the revenue generated by the “Please Call Me” line item from it’s inception in March 2001, to date. Despite this, Vodacom offered a mere R10 million, a far cry from the revenue they generated, viewing Makate’s contribution as an internal employee contribution rather than open-market commercial partnership. Throughout this deadlock, the CEO initiated a quasi-arbitration process, affording both parties to file written submissions and expert evidence. Another point of contention raised throughout this process was the debate on “incremental revenue” versus “total revenue”, considering that the “Please Call Me” model relies exclusively on the recipient making a return call after receiving a “Please Call Me” message from the originator, which is free of charge. After multiple valuation models were proposed and reviewed, the CEO determined a final amount of R47 million as suitable compensation for Makate. Makate was unhappy with this determination, arguing that the models proposed were mathematically flawed.
This triggered the second major wave of litigation, which shifted towards the judicial review of a private valuer’s determination. In 2019, Makate applied to the Gauteng Division of the High Court, Pretoria with the aim of reviewing the CEO’s determination of the R47 million. In Makate vs Joosub N.O. and Another ZAGPPHC 55, the court applied the common law Bekker test, derived from Bekker v RSA Factors. This test was sought to determine whether the valuer determined the evaluation on correct and materially accurate information, and if not, the court would intervene. The court found that the R47 million valuation determined by Joosub to be significantly flawed, as it did not account for the cumulative, continued value that Vodacom extracted from the service for nearly two decades. The High Court hence requested that the CEO make a fresh evaluation, subject to specific parameters and directions which considered Makate’s proposed models. Vodacom, aggrieved by this, approached the Supreme Court of Appeal in 2024, which further escalated the deadlock between Vodacom and Makate. Instead of remitting back to the CEO, the SCA tabulated it’s own mathematical directive, which entitled Makate to 5% to 7.5% of the total revenue generated by the “Please Call Me” product, including interest which now stretched over a 23-year compensatory period from it’s inception. This would prove a fatal financial blow to Vodacom, as it would yield a R29 to R55 billion payout to Makate. Vodacom’s present CEO, Sitho Mdlalose, stated that this would severely affect the equity value of the Vodacom Group, and shareholders.
After continued deadlock between the parties and courts involved, the matter was again referred to the Constitutional Court of South Africa. However, The Constitutional Court dismissed the SCA’s unilateral decision to substitute it’s own order for that of the High Court, arguing that doing so violated the defendant’s (Vodacom) constitutional right to a fair trial. Following this extensive deadlock, both parties were found in a compromising, highly unpredictable position of relitigating the entire mathematical disputes of compensation before a new panel of Supreme Court of Appeal judges. Both Vodacom and Makate recognised that this continued deadlock would only be more financially and reputationally costly, where Vodacom feared threats to it’s market capitalisation, and Makate risked a conservative ruling that may reinstate the CEO’s original R47 million determinations. In November 2025, both parties agreed to re-negotiate, in which oth parties would finally agree to settle out-of-court, ceasing all pending litigation going forward. As of late, the final settlement quantum is estimated to be in the range of R550 milllion to R748 million, which was seen as a compromise that allowed Vodacom to protect it’s long-term equity, while elevating Makate to substantial wealth for his contributions.
The Vodacom vs Makate case has left an irreversible impact on the South African legal landscape. The Constitutional Court’s expansion of the temporal window for plaintiffs seeking to enforce unliquidated obligations, created a remarkable precedent, now allowing employees to seek compensation for intellectual contributions long after inception. This is powerful such that corporations can no longer exploit statutory time-bars and create situations of deadlock to evade reciprocal obligations. Furthermore, the Constitutional Court set a procedural precedent by reinforcing the duty of proper consideration, and necessity of cross-appeals, imposing a directive to lower courts to exercise judicial restraint. Whilst both parties finally concluded the matter by settling out-of-court confidentially, this court will stand testament to the limits of corporate power versus individual contractual obligations.
Reference(S):
Makate vs Vodacom (Pty) Limited (08/20980) [2014] ZAGPJHC 135 (1 July 2014). Available at: Makate v Vodacom (Pty) Limited (08/20980) [2014] ZAGPJHC 135 (1 July 2014)
Makate v Vodacom (Pty) Ltd (CCT52/15) [2016] ZACC 13; 2016 (6) BCLR 709 (CC); 2016 (4) SA 121 (CC) (26 April 2016). Available at: Makate v Vodacom (Pty) Ltd (CCT52/15) [2016] ZACC 13; 2016 (6) BCLR 709 (CC); 2016 (4) SA 121 (CC) (26 April 2016)
Makate v Joosub N.O. and Another (57882/2019) [2022] ZAGPPHC 55; [2022] 2 AII SA 226 (GP) (7 February 2022). Available at: https://www.saflii.org/za/cases/ZAGPPHC/2022/55.html
Vodacom (Pty) Ltd v Makate and Another (401/2022) [2024] ZASCA 14; [2024] 2 AII SA 1 (SCA); 2024 (3) SA 347 (SCA) (6 February 2024). Available at: Vodacom (Pty) Ltd v Makate and Another (401/2022) [2024] ZASCA 14; [2024] 2 All SA 1 (SCA); 2024 (3) SA 347 (SCA) (6 February 2024)
Vodacom (Pty) Ltd v Makate and Another (CCT 51/24) [2025] ZACC 13; 2025 (10) BCLR 1174 (CC); [2025] 11 BLLR 1105 (CC); 2025 (6) SA 352 (CC) (31 July 2025). Available at: Vodacom (Pty) Ltd v Makate and Another (CCT 51/24) [2025] ZACC 13; 2025 (10) BCLR 1174 (CC); [2025] 11 BLLR 1105 (CC); 2025 (6) SA 352 (CC) (31 July 2025)
