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Kenya’s High Court has nullified the government’s sale of a 15 per cent stake in Safaricom Plc to Vodacom Group, overturning a transaction worth KES204.3 billion (about $1.6 billion) and ordering the shares to be returned to the Kenyan government.
The three-judge bench ruled that the divestment breached constitutional and legal requirements, including rules around public participation, procurement and disclosure of material information about the transaction.
The deal, which was completed on June 30, 2026, had increased Vodacom’s effective holding in Safaricom to about 55 per cent, while reducing the Kenyan government’s direct stake to 20 per cent. The latest judgment now places that ownership structure under legal challenge.
Court Says Transaction Was More Than a Share Sale
A central issue in the judgment was how the transaction had been presented to the public and state institutions.
The court found that the government described the arrangement as a partial divestment, while the structure effectively gave Vodacom control of Safaricom after it acquired full ownership of Vodafone Kenya, the investment vehicle through which it held its existing Safaricom shares.
According to the court, this meant the transaction had characteristics of a merger, acquisition and takeover, rather than simply a sale of part of the government’s shareholding.
The judges consequently quashed approvals and decisions connected to the transaction and ordered that any resulting merger, acquisition or takeover of Safaricom be cancelled.
Public Participation Comes Under Scrutiny
The ruling also focused heavily on whether Kenyans had received sufficient information to participate meaningfully in the decision.
Although Parliament conducted public hearings across 30 counties, the court found that important transaction documents, including the share purchase agreement and agreement covering future dividend rights, were not made available to the public.
The judges held that public participation must go beyond a formal consultation exercise and should be based on sufficient information for citizens to make informed contributions.
The court therefore concluded that the process did not meet the constitutional requirement for “real, purposive and meaningful” public participation.
National Security Concerns Raised
The court also examined the strategic importance of Safaricom to Kenya’s national infrastructure.
Safaricom operates services and systems connected to mobile money, government payment platforms and election transmission infrastructure, while also handling personal data belonging to millions of Kenyans.
The judges raised concerns about the implications of transferring effective control of such infrastructure to a foreign company without an adequate prior national-security assessment.
The court said regulatory safeguards alone could not substitute for proactive consideration of national-security risks before control of strategic infrastructure was transferred.
KES204.3bn Transaction Now in Legal Limbo
The government sold the 15 per cent Safaricom stake to Vodacom at KES34 per share, generating KES204.3 billion.
The government also received KES40.2 billion through the sale of future dividend rights attached to its remaining 20 per cent holding.
The transaction had received parliamentary approval in March, but legal challenges temporarily halted the process. The Court of Appeal subsequently lifted the restrictions in June, allowing the transaction to close at the end of that month.
The High Court ruling has now effectively reopened the dispute over the transaction and its financial and ownership consequences.
Court Questions Procurement and Valuation Process
Beyond the ownership issue, the judges also criticised aspects of the process used to select transaction advisers.
The court found that the procurement of advisory services involving KCB Investment Bank did not comply with constitutional and public-procurement requirements.
The judges also questioned the process used to determine the KES34-per-share price, rejecting the government’s argument that the valuation reflected an independent assessment and a market premium.
The court further faulted the decision to monetise future dividend income, holding that converting a long-term public revenue stream into an immediate payment raised concerns around the interests of future generations.
Government Moves to Appeal
Kenya’s National Treasury has rejected the court’s findings and announced plans to challenge the judgment at the Court of Appeal.
Treasury Cabinet Secretary John Mbadi said the government remained confident that the transaction had gone through the required institutional processes, including Cabinet and parliamentary scrutiny.
Mbadi also said the government disagreed with the court’s assessment of public participation, arguing that extensive consultations had taken place before the divestment was approved.
The government has already indicated its intention to appeal, setting the stage for another phase of litigation over the ownership of the Safaricom shares.
What the Ruling Means for Vodacom and Safaricom
The judgment creates uncertainty around a transaction that significantly altered Safaricom’s shareholder structure.
Vodacom had increased its effective ownership from 39.9 per cent to approximately 55 per cent, giving it majority control of Kenya’s largest listed telecommunications company.
The High Court has ordered the government’s 15 per cent stake to be restored, although the government’s appeal means the final outcome remains subject to further judicial proceedings.
The court also directed the parties to pursue a substantive application concerning whether the judgment should be stayed while the appeal is considered.
For Safaricom, Vodacom and the Kenyan government, the dispute now moves beyond the original share sale and into a wider legal examination of how strategic public assets are divested, how citizens participate in such decisions and what safeguards apply when foreign investors acquire effective control of critical national infrastructure.
