Safaricom sues firm over Sh540m Okoa bundle debt

Safaricom has moved to the High Court seeking Sh540.2 million from Kubwa Capital over unpaid Okoa bundle loans, accusing the firm of failing to honour an agreement under which it was to absorb the risk of bad debts from subscribers.

The telecommunications company claims Kubwa Capital had agreed to shoulder losses arising from unpaid bundle loans  after proposing a partnership to expand the number of Safaricom subscribers eligible for Okoa bundles.

Safaricom alleges that Kubwa Capital is now seeking to walk away from the agreement without settling the outstanding amount.

“Under the partnership agreement, the defendant bound itself to absorb the risk of expanding the eligible base of subscribers who were eligible for the Plaintiff’s okoa bundles. The citation and preambular statement to the partnership agreement, in its plain reading, and to a fair-minded reader, expressly and wholly allocates the risk of absorbing all bad debts flowing from the agreement to the defendant, subject to the terms and conditions therein,” Safaricom said in its court papers.

The telco said that following negotiations, the two parties agreed that Kubwa Capital would assume the risk of unpaid bundle loans by subscribers.

Under the arrangement, subscribers who were eligible for loans of Sh500 and below under Safaricom’s existing Okoa Jahazi rules would have their loan limits doubled.

“The Sh 500 limit may be changed from time to time, subject to the mutual agreement in writing,” Safaricom said.

The company said Kubwa Capital was also required to provide a Sh30 million bank guarantee to cushion it against bad debts every month.

Safaricom further claimed that the agreement capped bad debt at Sh100 million. If the amount reached the threshold, the agreement could be terminated within a 90-day grace period, with any outstanding amount to be settled within 30 days if the threshold was paid.

Under the partnership, Safaricom was to receive 85 per cent of revenue generated, while Kubwa Capital would receive 15 per cent.

Safaricom alleges that Kubwa Capital failed to honour its obligations, resulting in bad debts rising to more than Sh500 million.

“The plaintiff avers that on several occasions it flagged the material breach of the partnership, and in particular, the defendant’s failure to indemnify the plaintiff for the rising bad debts that had accrued to more than Sh 500 million. Despite the plaintiff’s demands, the defendant blatantly refused and failed to honour its obligations in compliance with the agreement,” the company said.

According to Safaricom, Kubwa Capital terminated the agreement on September 30, 2025, prompting the telco to demand Sh540.2 million, which it says remains unpaid.

“As a consequence of the defendant’s breach of the agreement, the plaintiff seeks compensation in the sum of Sh 540.2 million being the outstanding bad debts recoverable from the defendant under the agreement,” Safaricom argued.

Court documents also show that Kubwa Capital had nominated John Mutiso and Franck Wang as its representatives. Safaricom said Wang was tasked with tracking bad debts and ensuring the telco received its share of revenue generated under the partnership.

Safaricom subsequently wrote to Wang demanding payment of Sh500 million within 30 days.

However, Kubwa Capital’s lawyer Donald Kipkorir disputed the telco’s claim, arguing that the value of the agreement was Sh30 million and that his client did not owe Safaricom the amount being demanded.

Kipkorir also indicated that Kubwa Capital did not intend to continue with the partnership or seek an extension after it lapsed.

“Accordingly, our instructions are to facilitate mutual separation between our client and yourselves on an as is basis and most especially, with our client exiting the Partnership immediately free of any obligations particularly as our client’s guarantee has already been called up,” Kipkorir said in a letter dated November 12, 2025.

On July 21, 2026, Safaricom sent another demand to Wang seeking payment of Sh540 million.

In a response dated August 5, 2026, Kipkorir said his client denied owing Safaricom any amount.

“We have received our client’s instructions who denies in toto any liability or owing you the said sums, any greater or lesser sums or at all,” Kipkorir said.

He argued that Safaricom had failed to provide daily performance reports as required under the agreement and was also responsible for monitoring the servicing of 100 per cent of the debts.

Kipkorir further claimed that Kubwa Capital had suffered financial losses under the arrangement and attributed the losses to Safaricom.

The dispute will now turn on the interpretation of the partnership agreement, including the parties’ respective obligations over bad debts, revenue and the Sh30 million guarantee.