The long-running battle between Vodacom and a former employee has finally reached a denouement.
After nearly two decades of legal wrangling, the mobile telecoms giant has quietly reached an out-of-court settlement with Nkosana Makate. But at what cost?
The story is far from being about one man and his idea. It carries lessons for how innovation is valued in corporate South Africa — or not.
In November 2000, Makate — then a trainee accountant at Vodacom — is said to have pitched what became the “please call me” message callback request service. His claim: a verbal promise by a Vodacom executive, Philip Geissler, that if the idea proved successful, Makate would be compensated for it. The company deployed the service, quickly generating huge traffic and value — but it initially refused to pay Makate anything. He took the company to court.
In April 2016, after the case had already spent years wending its way through the legal system, the Constitutional Court found that Makate was entitled to compensation and that Vodacom had to negotiate with Makate in “good faith” for a reasonable payout. Tasked with this, Vodacom Group CEO Shameel Joosub determined that figure should be R47m, but this was rejected by Makate.
In recent days, Vodacom announced board approval of a settlement, and estimates put the payout at somewhere between R350m and R750m. While the company won’t confirm the exact number, citing strict confidentiality, a trading update suggests — though doesn’t definitively confirm — the impact on earnings as being in that ballpark. (I’ve heard the figure is north of R500m.)
Complicating the narrative is a claim by Ari Kahn, a former consultant at competitor MTN, whose paperwork suggests he had conceived a similar idea before Makate’s pitch to Vodacom, and had even filed a patent to this effect (it later lapsed, before Makate took Vodacom to court). MTN did not pursue Vodacom over the patent, possibly because it had lapsed and had entered the public domain, while Vodacom was reluctant to give MTN the credit for the idea, presumably because of corporate hubris.
When promises are left unfulfilled and disputes roll on for decades, the cost is higher than the headline payout
Vodacom’s decision to settle with Makate prompts the question: why now?
Whether motivated by legal exposure, reputational risk or pressure from parent company Vodafone, Vodacom blinked. Its decision to settle came just two weeks before the next scheduled hearing of the case at the high court. It could signal corporate fatigue — or perhaps a strategic calculation that the reputational cost of being seen to dig in again was greater than the financial cost of settlement. And there was always the possibility of legal defeat.
But this could all have been resolved far earlier, for much less cost.
The saga is a parable for corporate South Africa: when promises are left unfulfilled and disputes roll on for decades, the cost is higher than the headline payout.
First, Kahn’s claims aside, companies should recognise, document and reward innovation early. In fast-moving industries, islands of innovation can emerge from any quarter. Makate’s story shows what happens when a firm fails to turn a promise into a contract when it might have. For listed firms especially, offering clear pathways for employee inventions and ensuring that promises (verbal or not) are tracked is no longer a luxury — it’s basic governance.
Second, verbal commitments still matter. The Constitutional Court found that the verbal promise made by Geissler was binding on the company. Verbal deals, especially those referencing future compensation or participation in value creation, cannot be casually dismissed. If you don’t intend to honour them, don’t make them.
Third, litigation costs are not just financial in nature. Vodacom wasted years of executive attention and legal fees, and caused immense reputational damage to itself as the public sided with Makate in his fight with a corporate giant.
Fourth, parent-subsidiary dynamics do matter. Though Vodacom is a South African entity, it is part of Vodafone Group. The tipping point may well have been a calculation at the global level: how much reputational risk and distraction does a 17-year-long legal dispute create vs the one-off cost of settlement? Corporate South Africa’s multinationals must never assume local legal culture is detached from global brand management.
Last, the case puts ethical culture in the spotlight. In an age of ESG and stakeholder capitalism, firms are judged not just by financial performance, but by how fairly they treat employees, partners and innovators.
For South Africa’s corporate sector, the message here is clear: value your employees’ ideas, document your promises, respect your people and know when to fold. In the end, Goliath blinked. And that should resonate across boardrooms nationwide.
McLeod is editor of TechCentral
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