The payment of Sh244.5 billion to the Treasury for the sale of a 15 percent stake in Safaricom Plc to the parent firm, Vodacom Group, will take longer after the High Court extended a freeze on the transaction.
A bench of three judges of the High Court ruled that plans for the sale of the Safaricom stake should await the determination of the petitions filed by four Kenyans.
The court dismissed claims by the government that stopping the transaction would affect investor confidence.
‘Consequently, we do not buy into the argument that a constitutional adjudication automatically results in loss of confidence by investors,’ the judges said.
‘Such an argument, if accepted by this court, would lead to immunity from judicial review for public dealings because those dealings are economically motivated. That argument would run the supremacy of the Constitution afoul,’ the judges added.
Court setback
Vodacom had indicated readiness to wire the billions of shillings to Kenya in anticipation that the High Court would lift the freeze on the deal.
This means that the deal will drag on, putting the State in line to receive a Sh16 billion dividend from the 15 percent stake if Kenya remains with full ownership of 35 percent into August.
The pause on the transaction has delayed the payment of Sh244.5 billion to the Treasury, including Sh40.2 billion in advanced dividends from what would be the government’s residual 20 percent stake in the Nairobi Securities Exchange-listed firm.
‘We expect an update on this ruling on May 18, 2026. Pending this outcome, we’ll be able to finalise the deal very quickly,’ said Vodacom chief executive officer Shameel Joosub in a May 11 earnings call.
‘If the conservatory orders are not lifted, the court case will continue, and it could take a few more months. So, we are a little bit in the court’s hands, and we will see what the court decides,’ he added.
The transaction was frozen when petitioners Tony Gachoka and Fredrick Ogola sued several State agencies, Safaricom and Vodacom, questioning the legality of the government’s plan to reduce its stake in the telecoms giant.
The government defended the process, saying the proceeds of sales would be invested in an infrastructure fund and utilised prudently for public goods, and reduce the country’s debt burden.
It reckoned that the petitioners sought to stop a statutory-mandated process under Section 87A of the Public Finance Management Act and that the sale had already gone through a parliamentary process and public participation.
The judges, however, said that while they appreciated the importance of economic stability and investor certainty, constitutional compliance cannot be subordinated to commercial convenience.
‘A quick reminder is that investor confidence in a constitutional democracy like ours is not founded upon the unchecked exercise of public power, but upon the assurance that the government acts within the confines of the Constitution and the law,’ said the court.
The court case was filed as analysts and politicians debated the merits of the government’s partial divestment from Safaricom, with a major issue being whether the State will get full value from the sale price of Sh34 per share.
Some argue that the deal is good for Kenya, while others have been sceptical about the benefits of the transaction, seeing Vodacom as the winner after getting majority control of the profitable telecoms operator.
A joint parliamentary committee had approved the sale, paving the way for the conclusion of the transaction before the litigants struck.
Deal economics
Under the deal, the Treasury is to receive Sh204.3 billion for the 15 percent stake, representing a price of Sh34 per share.
The exchequer is also to receive a Sh40.2 billion dividend top-up, representing a loan backed by what will be Kenya’s remaining 20 percent stake in Safaricom.
The delayed sale, which had been expected to close before March, will see the Treasury collect Sh16.1 billion, representing its share of final dividends from its current 35 percent stake when book closure happens on August 4, if the transaction remains on pause.
Vodacom has insisted that the completion of the stake purchase fully rests on the court decision.
Concurrent to the purchase of the 15 percent stake from the government, Vodacom is also buying a five percent stake in Safaricom that is held by its parent firm, Vodafone Group, at the same price of Sh34 per share.
Once the twin deals are sealed, Vodacom will raise its ownership in the telecoms operator to 55 percent, attaining majority control.
Funding limbo
Earlier in May, Safaricom raised its per share final dividend to Sh1.15 from Sh0.65 previously after its net profit rose 67 percent to Sh95.6 billion.
The government’s share of dividends from Safaricom for the period to the end of March, including an interim dividend of Sh0.85 per share, is Sh28.04 billion.
Proceeds from the transaction are expected to flow to the National Infrastructure Fund (NIF), a vehicle designed to finance large-scale infrastructure expansion, including roads, railways, energy and water systems.
The Treasury indicated that there was no pressure to rush the deal as the funding is not a pressing budget issue.