African Telecoms Giant Cleared for Historic $1.6 Billion Takeover!

Kenya’s Court of Appeal has cleared the path for a major government transaction, overturning a high court order that previously blocked the sale of a 15% stake in Safaricom. This crucial ruling enables Vodacom, South Africa’s largest mobile operator, to proceed with a substantial $1.6 billion acquisition, effectively increasing its ownership in East Africa’s largest telecom provider. A three-judge bench, consisting of Justices Patrick Kiage, Lydia Achode, and Aggrey Muchelule, delivered the favorable verdict for the National Treasury on Friday, following an application to unblock the deal.

The transaction had been stalled since March, when Kenya’s high court ordered a temporary halt. This injunction arose from a dispute brought by petitioners who opposed the sale, arguing that divesting a public asset like Safaricom to a foreign entity violated constitutional principles of equity, accountability, and fairness, and that the public was not adequately consulted prior to the agreement. In contrast, the National Treasury had argued strongly that public interest demanded the sale move forward without further delay. The appellate judges agreed, stating in their ruling that the application “satisfies the two limbs of arguability and nugatory, and that the public interest compelling demands that the stay sought be granted.”

Beyond being a mere corporate transaction, the Safaricom stake sale holds significant importance as it is central to President William Ruto’s government’s plan to fund a substantial portion of public spending. With limited capacity for further borrowing or raising taxes, Kenya has turned to selling stakes in state-owned assets, including Safaricom and Kenya Pipeline Company, to finance ambitious infrastructure projects under Ruto’s expansive $39 billion development plan. This plan encompasses vital infrastructure such as railways, airports, roads, power lines, dams, and irrigation.

The sale is expected to generate approximately 204.3 billion shillings, equating to about $1.6 billion. Additionally, an upfront payment of 40.2 billion shillings will be made in exchange for dividends the government would have otherwise received from its stake. Treasury Secretary John Mbadi had previously warned in court filings that a prolonged delay risked the buyer reconsidering, re-pricing, or even abandoning the deal entirely – a significant risk now mitigated by the Court of Appeal’s decision.

Under the terms of the deal, Vodacom will raise its stake in Safaricom from 40% to a controlling 55%, while the Kenyan government’s share will be reduced to 20%. Furthermore, Vodacom will acquire Vodafone International Holdings’ remaining 12.5% stake in Vodafone Kenya, consolidating its position as the sole owner. It is notable that Vodacom does not intend to acquire the remaining Safaricom shares and is seeking a regulatory exemption from Kenya’s Capital Markets Authority to bypass this obligation. With the court's stay now lifted, the deal is poised to proceed, awaiting only the final regulatory approvals from Kenyan authorities.