Safaricom PLC has confirmed the High Court’s ruling nullifying the government’s sale of its 15 per cent stake to Vodacom, while Vodacom Group has said it will appeal the decision and seek a stay pending that appeal.
Safaricom issued a public announcement under the Capital Markets Act confirming the High Court’s judgment, delivered on September 15 by judges Francis Gikonyo, Roselyne Aburili and Tabitha Ouya, which ruled against the divestiture of its shares to Vodafone Kenya Limited and, effectively, Vodacom Group.
The company noted that the transaction had been completed on June 30 following the lifting of conservatory orders by the Court of Appeal and the fulfilment of all conditions precedent.
“Safaricom is reviewing the judgment and its implications,” the company said in a statement signed by company secretary Linda Mesa Wambani, adding that further updates would follow given that the matter remains subject to legal processes. The company said it would continue serving customers in Kenya and Ethiopia regardless of the litigation’s outcome.
Vodacom confirmed it would challenge the ruling. “As interim steps, Vodacom will lodge an appeal against today’s decision with the Court of Appeal and will also apply for a stay pending the determination of the appeal,” the company said. Vodacom shares fell nearly 4 per cent on the Johannesburg Stock Exchange following the ruling, before retracing some of those losses, while Safaricom shares gained as much as 2.2 per cent on the Nairobi Securities Exchange.
The judgment found that critical transaction documents, including the share-purchase agreement and a dividend-rights purchase pact, were withheld from public scrutiny, and that the government did not explain why it settled on Vodacom without a competitive selection process. The court further found that upfront monetisation of future dividends disenfranchised citizens in breach of the Constitution, and that transferring control of a strategic national asset to a foreign shareholder posed a threat to national security. Judges also found no evidence that the Competition Authority had approved the transaction, and that the parties had not applied for exemption from takeover requirements.
Vodacom had agreed in December to acquire an additional stake in Safaricom, raising its shareholding to about 55 per cent from almost 40 per cent, while the Kenyan Treasury’s interest fell to 20 per cent. The transaction, priced at KES34 per share for 8.01 billion shares, raised approximately KES204.3 billion ($1.6 billion), along with a further KES40.2 billion from the securitisation of future dividends. Should Vodacom’s appeal fail, Kenya’s Treasury may be required to refund the roughly $1.9 billion already received for the stake.
The ruling lands amid President William Ruto’s broader push to privatise state assets to help fund a $39 billion infrastructure pipeline spanning railways, airport upgrades, roads, power lines, dams and irrigation, alongside proceeds from other asset sales including Kenya Pipeline.
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