Telecom Giant Safaricom in Court Clash Over Dealer Contract Dispute

A high-stakes legal battle is unfolding in Kenya’s High Court as Safaricom, the country’s largest telecom provider, faces accusations from Goodweek Inter-Services Limited, a longtime M-PESA dealer, over alleged contract violations and market dominance abuse.

Goodweek, which has been selling Safaricom’s M-PESA services, SIM cards, and other products since 2002, claims it was unfairly removed from the dealership network after its contract expired in April 2024. The company insists that Safaricom leveraged its dominant position to impose non-negotiable contract terms, effectively forcing dealers into agreements favoring the telecom giant.

The case, currently being heard by the Constitutional and Human Rights division of the High Court, extends beyond Safaricom. Goodweek has also named Vodafone Plc, Vodafone Kenya Limited, and Mobitelea Ventures Limited as respondents, hinting at broader concerns over power dynamics in the telecommunications sector.

A Routine Expiry or Market Manipulation?

Safaricom maintains that Goodweek’s removal was procedural, not punitive. The company states that its dealer portal automatically suspends access once a contract expires, a measure designed to uphold compliance with regulatory and contractual obligations.

According to Safaricom, over 400 dealers successfully renewed their contracts within the required timeframe, making Goodweek’s allegations of unfair treatment unfounded. The telecom provider argues that Goodweek had ample opportunity to renew but opted not to, leading to the natural expiry of their agreement.

“The 1st respondent (Safaricom) did not terminate the contract between itself and the petitioner (Goodweek),” Safaricom stated in court documents. “The said contract lapsed by effluxion of time as parties were unable to negotiate and enter into another contract and/or extend the terms as they had previously done.”

However, Goodweek argues that it was effectively locked out for refusing to sign what it views as exploitative terms. The company believes that Safaricom’s contract structure leaves dealers with little room for negotiation, raising concerns about the fairness of such agreements.

Legal and Industry Implications

At the heart of this case lies a fundamental legal question: Did Safaricom simply follow standard contractual procedures, or did it use its market power to suppress smaller dealers?

While Safaricom insists the dispute should have been settled through arbitration as per the contract, Goodweek views this lawsuit as a pivotal moment in addressing the balance of power between telecom giants and their business partners. If the High Court rules in Goodweek’s favour, the outcome could influence future negotiations between dominant firms and smaller players in Kenya’s telecommunications sector.

With arbitration clauses, contractual fairness, and market dominance all under scrutiny, the verdict could reshape the telecom industry’s approach to dealer partnerships in the country.