Why Kenya Is selling 15% Stake In Safaricom To Vodacom?

The Government of Kenya has moved to partially divest its shareholding in Safaricom PLC, with the National Treasury seeking parliamentary approval to sell a 15 per cent stake in the telecommunications firm to raise approximately KSh204.3 billion.

In a presentation to a joint parliamentary committee in January 2026, National Treasury Cabinet Secretary John Mbadi said the proposed divestiture would reduce the government’s shareholding in Safaricom from 35 per cent to 20 per cent, while preserving strategic influence through board representation and governance safeguards.

According to the Treasury, the transaction will be executed through a sale to Safaricom’s existing strategic investor, Vodacom Group, at a negotiated price of KSh34 per share. This represents a premium of about 23.6 per cent to the six-month volume-weighted average price of KSh27.50 recorded up to December 2, 2025.

The sale is expected to generate gross proceeds of approximately USD 1.57 billion (KSh204.3 billion), paid in hard currency, providing the government with a significant non-debt source of funding at a time of constrained fiscal space.

Funding infrastructure without new debt

Treasury officials said the divestiture is aimed at mobilising resources for priority infrastructure projects in key sectors, including energy, roads, water, airports, and digital transformation, without increasing public debt or imposing new taxes.

“This transaction facilitates the mobilisation of significant resources without contracting debt or raising taxes,” Mbadi said, adding that infrastructure investment remains a central pillar of the government’s economic growth strategy

The proposal comes amid broader fiscal consolidation efforts, with the Treasury noting that traditional levers such as taxation and borrowing have reached optimal limits, necessitating alternative financing mechanisms.

Safeguards and national interest

Despite the reduction in shareholding, the government will retain a 20 percent stake in Safaricom and two board seats to safeguard national interests. Treasury said this residual holding will be maintained as a long-term strategic investment.

Vodacom has also committed to a number of conditions, including no acquisition-related redundancies for at least three years, retention of Kenyan leadership at the board level, and continued support for the Safaricom Foundation.

The Treasury further disclosed that Vodacom will make an upfront payment of KSh40.2 billion to the government instead of future dividends expected from the retained 20 per cent stake, a structure the Treasury says is favourable to the State both in present-value and future-value terms

Why Vodacom was chosen

The government opted for a sale to an existing strategic investor rather than an open market sell-down or a private equity transaction, citing the size of the deal, execution certainty, and the ability to secure a premium price.

Treasury noted that an on-market sale at the Nairobi Securities Exchange would likely have attracted a discount and posed completion risks due to the large ticket size, while a new financial investor could have led to strategic misalignment.

Vodacom currently holds about 40 per cent of Safaricom through Vodafone Kenya and has been a shareholder since 1998, providing technical, managerial, and capital support to the company.

Next steps and approvals

The proposed divestiture is anchored under Section 87A of the Public Finance Management Act and the Privatization Act, 2025, which requires Cabinet and National Assembly approval for the sale of government shares in government-linked corporations.

In addition to parliamentary approval, the transaction will be subject to regulatory clearances from bodies including the Capital Markets Authority, Competition Authority of Kenya, Central Bank of Kenya, Communications Authority of Kenya and the Nairobi Securities Exchange.

The Treasury has formally requested the joint committee to consider and recommend approval of the proposal, which it says will deepen capital markets, attract foreign currency inflows, and support long-term economic growth while maintaining government influence in one of Kenya’s most strategic corporate assets.

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