The government’s plan to sell its 15 percent stake in Safaricom to Vodacom for approximately Sh245 billion has generated political debate, with Kiharu MP Ndindi Nyoro leading the criticism.
Mr Nyoro claims the government is giving away a national asset for ‘a song’, citing Safaricom’s 2021 share price of Sh41.
While this claim makes for a catchy headline, it collapses under financial scrutiny and a realistic assessment of Safaricom’s current position.
Today, the company trades at around Sh29.45 per share, and professional valuations rely on current fundamentals, not nostalgia for past peaks. More importantly, Safaricom is a diversified, multisegmented business whose true value cannot be captured by a simple comparison to historical prices.
The Sum-of-the-Parts (SOTP) methodology is the most accurate approach, valuing each business unit according to its growth, risk, and market comparables.
Safaricom’s largest segment is its core telecom business, which includes mobile voice, data, SMS, fixed broadband, and enterprise connectivity.
Telecom companies are generally valued using EV/EBITDA (a ratio that compares a company’s Enterprise Value to its Earnings Before Interest, Taxes, Depreciation and Amortisation) multiples because they carry heavy capital expenditure, infrastructure, and depreciation costs that distort net earnings.
Safaricom’s current EV/EBITDA multiple stands at approximately 7.07x. Assigning 60 percent of the company’s 2024 EBITDA of Sh186.2 billion to the core telecom segment yields a value of about Sh790 billion, forming a stable foundation for the company’s valuation.
The second segment is M-Pesa and other fintech services, generating roughly Sh161 billion in revenue.
Fintech businesses typically earn higher multiples than telecom operations because they scale quickly, require less incremental capital, and have high growth potential.
Applying a conservative EV/Revenue multiple of 2.5x to M-Pesa places its valuation at approximately Sh400 billion, reflecting its central role in Kenya’s financial ecosystem.
The third segment includes enterprise services, fibre, cloud, Internet of Things (IoT), and emerging digital ventures. While smaller today, this segment represents future growth opportunities.
Assigning 15 percent of EBITDA to this segment and applying a 6x multiple results in a value of roughly Sh168 billion, which can reasonably be rounded to Sh170 billion to account for growth potential. Adding the three components together produces a total SOTP valuation of about Sh1.36 trillion, or roughly Sh34 per share based on 40.07 billion outstanding shares.
The government’s asking price of Sh245 billion for 15 percent of Safaricom implies a total company valuation of around Sh1.63 trillion, well above the SOTP estimate and Safaricom’s current market capitalisation. Rather than a giveaway, the State is negotiating at a premium, contradicting Mr Nyoro’s ‘song’ narrative.
Beyond the numbers, the sale to Vodacom carries strategic significance. By transferring the stake to a global telecom giant, the government is ensuring continuity and the long-term sustainability of Safaricom.
Vodacom brings decades of experience in telecom, mobile money, digital finance, and emerging technologies. Its interests are aligned with Safaricom’s growth trajectory, a sharp contrast to the sale of Telkom Kenya to Helios Investment Partners, where the buyers were focused on short-term profit extraction rather than sustaining the company’s future.
That transaction led to underinvestment, restructuring, and stagnation-outcomes the government is keen to avoid for Safaricom.
Selling to Vodacom protects the company’s leadership in mobile money, integrates global expertise, and positions it to capitalise on innovations in cloud computing, IoT, and digital finance.
Mr Nyoro’s critique is grounded in political rhetoric, not financial or strategic reality. Safaricom’s fair value, based on a rigorous SOTP valuation, is around Sh34 per share, making the government’s Sh245 billion price reasonable and financially sound.
Coupled with Vodacom’s long-term commitment and experience, the transaction ensures continuity, growth, and stability, securing Kenya’s crown jewel rather than undermining it.