The High Court has quashed the Government of Kenya’s sale of its 15.0% stake in Safaricom PLC to Vodacom Group, declaring the Sh204.3 bn transaction invalid, null, and void, and ordering the shareholding restored to the Government on behalf of the public. The ruling, delivered by a three-judge bench, unwinds a deal that had been completed on 30th June 2026 and had lifted Vodacom’s effective ownership of Safaricom to 55.0%, up from 39.9%, through its wholly-owned investment vehicle, Vodafone Kenya.
The court’s reasoning rested on four pillars. First, on disclosure, the bench found that the transaction was presented publicly as a partial divestiture when, in substance, it constituted a takeover conferring effective control of Safaricom on a foreign entity, with material documents, including the share purchase agreement and dividend rights agreement, withheld from Cabinet, Parliament, and the public. Second, on public participation, the court held that consultation must be “real, purposive, and meaningful” rather than a procedural formality, finding that hearings conducted across 30 counties did not cure the absence of the underlying transaction documents. Third, on national security, the judges noted that Safaricom operates critical infrastructure, including election transmission systems, government payment platforms, and mobile money services, and held that transferring effective control to a foreign entity without a prior national security assessment breached the Government’s constitutional obligations. Fourth, on valuation, the court rejected the Sh34.0 per share pricing as arbitrary despite an independent valuation by KCB Investment Bank, and separately rejected the sale of Sh40.2 bn in future dividend rights on the retained 20.0% stake, reasoning that converting a perpetual income stream into a lump sum disadvantages future generations’ claim on a public asset.
The judgment also found that Parliament’s March approval of the transaction was constitutionally defective given the non-disclosure of material information, and dismissed arguments that existing regulatory oversight by the Communications Authority and the Office of the Data Protection Commissioner was sufficient to address the national security concerns raised. The Government’s application to stay the judgment pending appeal was rejected, meaning the ruling takes immediate effect while an appeal is pursued.
We view this ruling as introducing renewed uncertainty into the ownership structure of Kenya’s largest listed company by market capitalisation, with implications for Vodacom Group’s consolidation accounting, the Nairobi Securities Exchange’s free float dynamics, and the broader climate for strategic state-asset divestitures. We expect the Government’s appeal process, alongside any resulting share price volatility at Safaricom, to be a key area of focus for investors in the near term, particularly given the precedent this ruling sets for disclosure and public participation standards in future privatisation transactions. (Start your investment journey today with the cytonn MMF, call+2540709101200 or email sales@cytonn.com)
