Tycoon sues Vodacom over airtime credit

A businessman is demanding five cents of every rand cellphone giant Vodacom has made from its money-spinning airtime advance product.

The five-year-old product was launched by Vodacom in May 2011 but Katlehong, Ekurhuleni, businessman John Khaba is demanding compensation from the company, accusing it of misappropriating his idea and launching it as its own in 2011.

The product allows customers to buy R10 airtime on credit, and then pay an additional R1 the next time they recharge, which brings the amount they pay back to R11.

Khaba allegedly approached Vodacom with the airtime advance idea a year before it launched the product to alleviate problems experienced by operators.

The 57-year-old offered to buy additional prepaid airtime in bulk for operators of Vodacom's cellphone containers in townships on credit, which they would later repay with Khaba getting five cents for every rand advanced to operators by Vodacom.

Khaba, through his company Ndabenhle Business Enterprises, proposed that his customers would pay back the airtime he advanced with Vodacom's fee and it would then pay him "the whole amount of any airtime advanced to them by the plaintiff [Khaba's Ndabenhle Business Enterprises] plus the plaintiff's fee repaid by operators".

In papers filed at the South Gauteng High Court in Johannesburg, Khaba says he proposed the idea to Vodacom's then chief operations officer Vuyani Jarana on April 6 2010.

Within a month of its launch, the product had over one million subscribers.

Khaba's lawsuit comes when Vodacom and its former employee Nkosana Makate await judgment from the Constitutional Court on the protracted battle over another product, "Please Call Me", which Makate claims belongs to him. The matter was heard in September last year. Should Makate succeed he is expected to get hundreds of millions of rands from Vodacom, according to papers filed at the country's highest court.

Khaba's payout is also likely to be significant if he succeeds as he is demanding five cents of every R1 of pre-tax profit earned by Vodacom from its airtime advance since May 2011.

After Jarana referred Khaba's idea to Vodacom's informal markets department, the businessman met at least four other Vodacom officials at the company's headquarters in Midrand, according to court papers. Khaba also allegedly spoke to Cointel V.A.S., a company hired by Vodacom to help him access its portal.

According to Vodacom's latest annual results, it has 27.2-million prepaid customers in SA and sold voice bundles of R576-million in the year ended in March last year.

Khaba's lawyer Phumzo Mbana said the matter was set down for next month.

In its heads of argument, Vodacom said Khaba has "palpably" failed to prove it was in breach of its legal duty.

X