Safaricom’s Future Ownership Structure Is Now Under Constitutional Scrutiny

Kenya’s High Court has temporarily halted the government’s planned sale of a 15 percent stake in Safaricom to Vodacom Group, pushing a major corporate transaction into a wider constitutional dispute over control of the country’s digital infrastructure.

The proposed transaction would reduce the State’s holding in Safaricom from 35 percent to 20 percent while increasing Vodacom’s ownership to 55 percent, giving the South African operator majority control of the company behind M-Pesa. The deal had already secured parliamentary approval and clearance from the COMESA Competition Commission before the court intervened.

What began as a privatisation and infrastructure financing transaction is now being argued as a question of economic sovereignty, regulatory jurisdiction and control over sensitive financial and communications data tied to millions of Kenyans.

Petitioners challenging the deal argue that Safaricom occupies a uniquely strategic position in the economy because M-Pesa functions as both a payments platform and a critical financial rail used across commerce, banking, tax collection and everyday transactions. Safaricom also remains Kenya’s dominant telecommunications operator with more than 42 million subscribers and extensive access to subscriber identity records, transaction histories and location metadata.

The legal challenge increasingly revolves around Kenya’s data governance laws.

Critics of the transaction point to Sections 48 and 49 of Kenya’s Data Protection Act, which regulate cross-border transfer and processing of personal data. Under the law, entities handling Kenyan user data must demonstrate adequate safeguards before transferring information outside the country and may require explicit consent depending on the nature of processing involved.

Opponents of the deal argue that majority foreign ownership could gradually expand intra-group data sharing within the broader Vodacom and Vodafone structure through regional integrations, vendor systems or cloud architecture changes. The concern is not simply where data is stored, but whether Kenyan regulators retain full visibility and enforcement authority once strategic operational decisions shift outside the country.

Safaricom currently operates local data infrastructure and remains subject to oversight from the Office of the Data Protection Commissioner, the Communications Authority of Kenya and the Central Bank of Kenya.

Vodacom’s position is that Safaricom would remain incorporated in Kenya, continue operating under Kenyan law and maintain compliance with local regulatory requirements regardless of ownership changes. The company has also maintained that existing local infrastructure and regulatory supervision provide sufficient safeguards for customer data and operational oversight.

The court dispute arrives as Kenya’s judiciary has taken a more assertive posture on digital governance issues.

Earlier rulings involving Worldcoin placed data collection and biometric processing under intense constitutional scrutiny, reinforcing the growing role of courts in disputes involving digital identity systems, platform governance and personal data protections.

The Safaricom case extends that scrutiny into telecommunications and mobile money infrastructure, an area increasingly viewed by policymakers as part of national strategic infrastructure rather than a conventional commercial asset class.

That shift carries direct financial implications.

The delayed transaction means the Treasury will continue receiving dividends attached to the disputed 15 percent stake while the case remains before the courts. Based on Safaricom’s recently declared payout of Sh2 per share for the financial year ended March 2026, the government stands to retain roughly Sh16.1 billion that would otherwise have shifted to Vodacom had the transaction closed earlier.

Safaricom’s strong earnings have also helped stabilize investor sentiment despite the legal uncertainty. The company reported a 67 percent rise in net profit to Sh95.6 billion for the year ended March 31, reinforcing its position as one of the Nairobi Securities Exchange’s most profitable listed firms.

Treasury officials had previously indicated that proceeds from the transaction were intended for the National Infrastructure Fund, which is expected to support large-scale transport, water and energy projects. At the same time, the government has continued exploring alternative financing channels including public-private partnerships, pension capital mobilisation and proceeds from other state asset transactions.

That has reduced immediate pressure to conclude the Safaricom sale quickly, especially after Treasury officials publicly stated that the proceeds were not essential for short-term budget support.

For Vodacom, the transaction remains strategically important because it would consolidate operational control over Safaricom and align the Kenyan operator more closely with the group’s wider regional business structure. The deal also includes the acquisition of an additional 5 percent stake from parent company Vodafone Group at the same Sh34 per share price.

The broader significance of the case now stretches beyond Kenya’s telecom sector.

Across multiple African markets, regulators and courts are increasingly treating data systems, payment networks and communications infrastructure as strategic national assets with implications for economic security and state authority. Kenya’s High Court intervention reflects a growing policy debate over how governments balance foreign investment, fiscal needs and domestic control over digital infrastructure that underpins daily economic activity.

The conservatory orders leave the transaction suspended pending further court proceedings, with the outcome likely to influence how future telecom, fintech and data infrastructure deals are assessed across the region.

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