Kenya’s High Court has nullified the government’s sale of a 15% stake in Safaricom Plc to Vodacom Group, ruling that the multibillion-shilling divestiture violated the Constitution and applicable laws and ordering the shares to be restored.
The decision threatens to unwind a transaction worth about KSh204 billion ($1.6 billion) that was completed in June after Kenya’s Court of Appeal lifted an injunction blocking the sale. Vodacom subsequently took its effective holding in Safaricom to about 55%, giving it control of East Africa’s largest mobile operator.
The High Court’s ruling creates a new legal and financial complication for both the Kenyan government and Vodacom, with the State having already received payment for the shares.
The dispute centered on whether the government had followed constitutional requirements governing the disposal of public assets, including transparency and public participation. Earlier proceedings had also raised questions about the valuation and process used to sell the stake.
The transaction was priced at KSh34 a share, with the government expecting to raise more than KSh200 billion from the disposal. The Treasury had said the sale would help reduce reliance on public borrowing and provide funding for infrastructure and other government priorities.
Vodacom completed the acquisition on June 30 after the Court of Appeal lifted conservatory orders that had temporarily prevented the transaction from proceeding. The appellate court said at the time that it was not determining whether the sale itself was lawful, but found that the government had met the threshold for lifting the injunction.
The Court of Appeal’s intervention allowed Vodacom to acquire the government’s 15% holding through a block trade on the Nairobi Securities Exchange. Vodacom also acquired an effective 5% stake from Vodafone, taking its overall ownership of Safaricom to approximately 55%.
The High Court ruling now puts the completed transaction back at the center of the constitutional dispute.
For Kenya, the stakes extend beyond the ownership of Safaricom. The company is one of the country’s most strategically important corporate assets, operating the M-Pesa mobile-money platform alongside its telecommunications business. The government retained a 20% stake after the transaction, down from 35%.
The ruling could therefore require the reversal of the share transfer and raise questions over the repayment of the purchase consideration already received by the government.
The case also exposes the legal risks surrounding the government’s broader strategy of selling state assets to raise funds and reduce pressure on public finances. The Safaricom transaction had been presented by Treasury as part of a shift toward mobilizing capital from state investments rather than relying primarily on additional borrowing or higher taxes.
The High Court had previously frozen the proposed sale in May after a three-judge bench found that the constitutional challenge raised issues requiring determination. At that stage, the court rejected the government’s argument that suspending the transaction would necessarily damage investor confidence.
The Court of Appeal later allowed the sale to proceed, clearing the way for completion before the underlying constitutional challenge had been finally determined.
The latest ruling means the government and Vodacom now face a potentially complex process of implementing the court’s order, including the restoration of the 15% Safaricom stake and resolution of the funds paid for the shares.
Vodacom had previously said the transaction involved a cash payment of KSh204 billion to the Kenyan government for the 15% stake, alongside a separate KSh68 billion payment to Vodafone for an effective 5% interest.
The ruling marks a major reversal for a transaction that had been positioned by the government as an important source of capital at a time when Kenya is under pressure to contain public debt and finance development spending.
