Kenya’s High Court has declared the government’s sale of a 15% stake in Safaricom to Vodacom unlawful, invalid and without legal effect, throwing the ownership structure of the telecommunications company into fresh uncertainty.
The court quashed actions taken by the government in connection with the transaction and ordered the 15% stake to be restored to the state.
The case was brought by four petitioners — veteran journalist and activist Tony Gachoka, Prof Fredrick Onyango Ogola, Paul Maina Mugo and Samuel Kahara Macharia — who challenged the government’s plan to sell part of its Safaricom holding.
They argued that the transaction raised constitutional concerns over the disposal of a strategic national asset, valuation, public participation and foreign control of critical infrastructure.
However, the ruling does not mean the shares will immediately return to government ownership.
Appeal could determine Safaricom ownership
Vodacom, the government and other affected parties can appeal the High Court decision and seek a stay of execution while the appeal is heard.
The sale had already been completed on June 30, 2026, after the Court of Appeal lifted orders that had previously stopped the transaction.
Following the sale, Vodacom increased its effective holding in Safaricom to about 55%, while the government’s stake fell to 20%.
A stay would allow the current ownership structure to remain in place while the appeal proceeds, without overturning the High Court judgment.
If the appeal succeeds, Vodacom would retain its majority position.
However, if the High Court judgment survives the appeals process, the 15% stake would have to be returned to the government. Assuming the separate restructuring remains intact, Vodacom’s effective holding could then fall to about 40%.
KES204.3bn sale proceeds add complexity
The government received about KES204.3 billion (approximately $17.7million) (for the 15% stake, creating another significant issue if the transaction is ultimately reversed.
The parties would have to determine how the proceeds are returned and how other elements of the transaction are unwound.
These could include dividends, transaction costs, accounting entries and the separate arrangement under which the government received an upfront payment in exchange for future dividend rights.
The reversal could therefore involve the government, Vodacom, Safaricom, regulators, shareholders and financial advisers.
Ruling puts focus on public participation
The judgment could also have implications beyond the Safaricom transaction, particularly for the government’s wider programme to sell or restructure public assets.
The court found that the government had not followed the required process, particularly regarding public participation and disclosure of key transaction details.
It also raised concerns relating to valuation, national security and the effective transfer of control of a strategic company.
The ruling reinforces the significance of public participation in government projects and decisions, with courts able to treat it as a constitutional requirement rather than simply a procedural step.
Safaricom operations remain unaffected
Safaricom’s mobile, M-Pesa, broadband and enterprise services are expected to continue operating, with the immediate dispute centred on ownership and control rather than the company’s day-to-day services.
Vodacom’s 55% position had given it majority control and allowed it to consolidate Safaricom in its financial statements.
A reversal of the 15% sale would remove that majority position and could affect board control, financial reporting, shareholder rights and strategic decisions. However, those changes will depend on the outcome of the ongoing legal process.
The next developments will centre on whether the affected parties secure a stay, whether appeals are filed and whether the Court of Appeal permits the current ownership structure to remain during the process.
The treatment of the KES204.3 billion (17.7 million) sale proceeds and the future-dividend arrangement will also be closely tied to the outcome.
