The Kenyan government has filed a notice of appeal against a High Court judgment that invalidated the sale of a 15% stake in Safaricom Plc to Vodacom, reopening a major legal dispute over one of Kenya’s largest privatisation transactions.
LIVENSE market summarySee NSE data →The High Court on September 15 declared the divestiture unconstitutional and ordered the shares restored to the government. The State has now moved to challenge that judgment, maintaining that the transaction complied with the law and was designed to unlock public capital for infrastructure investment.
The government sold the 15% stake at KSh34 per share for about KSh204.3 billion and separately agreed to receive roughly KSh40 billion upfront in respect of future dividend rights, taking the overall transaction value to about KSh244 billion.
Key Overview
The dispute centres on whether the State complied with constitutional and statutory requirements governing public participation, transparency, valuation and the transfer of a strategically important national asset.
The government argues that the process underwent Cabinet consideration, parliamentary scrutiny and extensive public participation. The High Court reached a different conclusion, finding that important transaction documents were not available to participants and that the structure raised broader governance and national-security issues.
The appeal means those findings will now be tested before a higher court. Vodacom has also indicated that it intends to appeal and seek a stay of the High Court orders while the case proceeds.
Court Orders Safaricom Shares Returned to State
A three-judge High Court bench nullified the transaction and ordered the government’s 15% stake returned after concluding that the divestiture breached constitutional and legal requirements.
Among the issues raised by the court was the adequacy of public participation. Parliament had held hearings across 30 counties, while its joint committee reported receiving submissions from 43 stakeholder organisations and institutions before approving the proposed transaction.
However, the court found that key documents, including the share purchase agreement and arrangements relating to future dividend rights, were not disclosed during the consultation process. It concluded that public engagement required access to sufficient material for citizens to meaningfully assess the transaction.
The judgment also quashed Sessional Paper No. 3 of 2025, the parliamentary policy instrument underpinning the proposed partial divestiture.
Government Rejects Court’s Findings
National Treasury Cabinet Secretary John Mbadi said the government disagrees with the High Court’s conclusions and intends to pursue the case through the appellate process.
The Treasury’s position is that the divestiture was structured as a fiscal measure intended to convert part of the government’s Safaricom investment into funding for national development while leaving the State with a significant remaining shareholding.
When the transaction was announced, the government said it would retain a strategic stake in Safaricom and had negotiated protections covering Kenyan leadership, employees, local suppliers, Safaricom’s brand and its foundations.
The government’s 2026 fiscal documents estimated proceeds of about KSh204 billion from the share sale, alongside an upfront payment related to future dividends, with funds intended to support infrastructure investment.
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How the Vodacom Transaction Changed Safaricom Ownership
The government transaction formed part of a broader deal through which Vodacom increased its effective interest in Safaricom.
After the transaction closed on June 30, Vodacom said its effective Safaricom shareholding had increased to about 55%. The increase incorporated the 15% stake acquired from the Kenyan government and an additional effective 5% acquired through a separate transaction with Vodafone.
The Kenyan government retained 20% following the sale.
LIVENSE market summarySee NSE data →This change in effective control became one of the central issues examined during the legal challenge. The High Court questioned whether the transaction should have been treated simply as a partial government divestiture or assessed more broadly in light of the resulting controlling interest.
The appellate process will determine whether those findings should stand.
KSh34 Share Price Also Came Under Scrutiny
The pricing of the deal was another contested area.
Parliament’s review shows that KCB Investment Bank had been appointed to conduct an independent valuation, with the analysis using approaches including discounted cash flow, discounted dividends, EV/EBITDA multiples and price-to-earnings comparisons.
The agreed transaction price was KSh34 per share.
The government previously argued that this represented a premium to Safaricom’s prevailing market valuation when the transaction was negotiated. Critics of the deal, including the petitioners, challenged aspects of the valuation and the process through which the final price was determined.
Those competing positions will form part of the wider legal and financial context as the dispute moves through the courts.
What Happens to the Safaricom Deal Now?
Filing a notice of appeal signals that the government intends to ask the Court of Appeal to review the High Court judgment, but it does not itself overturn that judgment.
Vodacom has similarly stated that it plans to appeal the decision and seek a stay so that implementation of the High Court’s orders can potentially be suspended while the appeal is determined.
The immediate legal status of the transaction will therefore depend partly on whether the appellate court grants any stay orders and ultimately on how it rules on the substantive appeal.
Until that process is resolved, uncertainty remains over the government’s 15% shareholding, Vodacom’s resulting level of control and the treatment of the transaction proceeds.
The case has consequently moved beyond a dispute over the sale price of Safaricom shares. It now involves broader questions about how th State can dispose of strategic public assets, what constitutes adequate public participation and how commercial transactions should be balanced against constitutional and public-interest requirements.
Sources
National Treasury / Parliament of Kenya / Vodacom Group / Daily Nation / Business Daily / Reuters
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