Safaricom Accused of Unfair Dealership Contract in Case That Could Impact Telecom Partnerships

Safaricom has been accused by one of its long-standing dealers, Goodweek Inter-Services Limited, over what the latter describes as an unfair contract that resulted in its exclusion from the telecom operator’s dealership network. 

The case, which is currently before the High Court of Kenya’s Constitutional and Human Rights Division, could affect how major corporations engage with their smaller partners.

Goodweek, which has operated as a Safaricom dealer since 2002, claims it was effectively pushed out of the network after refusing to sign a contract with unfavourable terms. 

The company sold M-PESA services, SIM cards, and Safaricom products at its outlets in Nairobi, Migori, and Homa Bay counties. However, it lost access to Safaricom’s dealer portal in April 2024 after failing to renew its contract.

While Safaricom argues that the contract lapsed naturally, Goodweek insists that the renewal process was deliberately designed to put dealers at a disadvantage. The company claims the telco used its dominant position to impose tough conditions, making it impossible for merchants to negotiate better terms. 

As part of its legal strategy, Goodweek has also named Vodafone Plc, Vodafone Kenya Limited, and Mobitelea Ventures Limited as respondents in the case, arguing that the issue extends beyond just Safaricom.

Safaricom, in its defence, maintains that all dealers operate under the same contractual terms and that over 400 others renewed their agreements without issue. The telecom giant states that its “Online Dealer Trading Portal’s automated shut-down response is a safeguard mechanism designed to ensure compliance with regulatory and contractual obligations.” 

It further argues that Goodweek had ample notice to renew its agreement and that the case should have gone to arbitration rather than court, as stipulated in the contract.

Goodweek, however, insists that its removal was not a simple procedural matter but rather an example of Safaricom using its influence to dictate one-sided agreements. 

The company views this case as an opportunity to challenge the power dynamics between large telecom firms and smaller dealers. If the court rules in its favour, the decision could set a precedent for how dominant companies interact with their business partners in Kenya’s telecommunications sector.

This is not the first time Safaricom has faced a class action lawsuit. In recent years, the company has been taken to court over various consumer-related issues. In 2022, businessman Abdi Zeila sued Safaricom and the Communications Authority of Kenya over SIM-swap fraud, inviting other victims to join the case. 

That same year, another lawsuit accused the company of forcing subscribers to sign a data privacy statement that allegedly gave Safaricom access to their bank details. In 2023, a separate class action suit allowed millions of Safaricom users to challenge a clause in the SIM card registration process over concerns about data privacy.

With past legal issues and now a dispute with its dealership network, Safaricom finds itself at the centre of yet another controversy.