Safaricom PLC has emerged as a major source of unexpected fiscal relief for Kenya after delays in the government’s planned sale of a 15 percent stake to Vodacom Group positioned the Treasury to earn an additional Sh16.1 billion in dividend income.
The government had initially targeted March 31, 2026, as the completion date for the Sh244.5 billion transaction that would reduce its shareholding in Safaricom from 35 percent to 20 percent. However, ongoing court proceedings challenging the legality of the transaction have pushed the deal beyond the expected timeline, allowing the State to remain eligible for Safaricom’s newly declared final dividend payout.
Safaricom recently announced a final dividend of Sh1.15 per share for the financial year ended March 31, 2026, representing a 76.9 percent increase from the Sh0.65 paid in the previous year. Combined with the interim dividend of Sh0.85 per share paid earlier in March, the company’s total annual dividend rose 66.7 percent to Sh2.0 per share from Sh1.2 previously.
The delayed transaction means the government will continue holding 14 billion Safaricom shares through the dividend book closure date scheduled for August 4, 2026. As a result, the Treasury is now set to retain dividends linked to the 15 percent stake that would otherwise have transferred to Vodacom upon completion of the transaction.
The additional Sh16.1 billion dividend payout highlights the growing importance of dividend-generating State assets in supporting Kenya’s fiscal position at a time of elevated debt servicing obligations and constrained tax revenue growth.
Safaricom’s strong financial performance further amplified the value of the delayed transaction. The telecommunications giant reported a 36.9 percent increase in net profit to Sh95.6 billion in FY2026, up from Sh69.8 billion previously. The company’s total shareholder payout reached Sh80.13 billion, aligning with its policy of distributing 80 percent of annual earnings.
The Treasury’s total dividend earnings from its 35 percent shareholding are now projected at Sh28.04 billion, compared to Sh11.9 billion earned from the interim payout alone earlier in the year. The significant increase reflects both improved profitability and higher shareholder distributions by the company.
The government’s proposed stake sale forms part of a broader asset monetization strategy aimed at financing infrastructure expansion through the newly created National Infrastructure Fund (NIF). Proceeds from the Safaricom transaction, alongside funds raised from the Kenya Pipeline Company (KPC) initial public offering, are expected to provide seed capital for large-scale investments in transport, energy, and water infrastructure.
However, the transaction remains politically and economically divisive. Supporters argue that deeper integration with Vodacom could strengthen Safaricom’s regional expansion strategy, improve operational scale, and enhance access to capital and technical expertise. Critics, on the other hand, question whether Kenya is surrendering control of one of its most profitable strategic assets too early, especially given Safaricom’s growing dividend capacity and dominant market position.
The proposed transaction would see Vodacom raise its ownership in Safaricom to 55 percent after acquiring the State’s 15 percent stake and an additional 5 percent from parent company Vodafone Group. The Kenyan government’s stake would consequently fall to 20 percent, while public shareholders would retain a combined 25 percent holding.
Legal uncertainty surrounding the transaction continues after multiple petitions challenged the sale process, prompting referral of the case to Chief Justice Martha Koome for the appointment of a multi-judge bench. The delay has unintentionally created a near-term financial gain for the Treasury, even as uncertainty persists over the long-term strategic implications of reducing public ownership in Kenya’s largest listed company.
