Mbadi: State will retain key stake in Safaricom

The government will retain a strategic stake, representing 20 per cent, with two seats on the board of Safaricom to safeguard national interests and ensure continuity after selling shares to Vodacom, National Treasury Cabinet Secretary John Mbadi has assured Kenyans.

He said the residual 20 per cent shareholding represents a long-term investment in Safaricom by the government, and through the transaction, Vodacom has made various commitments, including no acquisition-related redundancies within three years of the transaction as it sells its shares worth Sh204 billion.

The Cabinet Secretary told a joint sitting of the National Assembly Finance and Public Debt and the Privatisation committees that the engagement will also ensure that the chairman and independent directors remain Kenyans, as well as Vodacom’s continued support of the Safaricom Foundation as it reduces its shares from 35% to 20%.

“The partial divestiture generates approximately Sh204 billion in gross proceeds through the divestiture of a 15 per cent stake in Safaricom at a premium of 23.6 per cent to the 6-month volume-weighted average price ending December 2, 2025; this transaction facilitates the mobilisation of significant resources without contracting debt or raising taxes,” said Mbadi.

He told the legislators this is the first step in the government’s vision to allocate resources into critical infrastructure investment priorities, specifically energy, roads, water and airports, with the investment in priority national infrastructure aimed at ensuring it becomes a powerful tool to fuel the economy, accomplish strategic goals, and scale public investment by bridging institutional capital with public projects.

"The proposed buyer, Vodacom Group, is a long-standing investor in Safaricom, holding approximately 40% through Vodafone Kenya, with deep regional experience and a proven track record in capital investment, digital infrastructure, innovation, and financial inclusion, with their increased stake reinforcing Safaricom’s competitiveness and growth trajectory."

Mbadi said in addition to the approval by the National Assembly, the transaction is also governed by the Capital Markets Act and is subject to approvals and notifications from relevant regulators and stakeholders, including the Competition Authority of Kenya, Central Bank of Kenya, Communications Authority of Kenya and the Nairobi Securities Exchange, where applicable.

“Safaricom which was listed in the Nairobi Securities exchange in 2008 expanded into Ethiopia in 2022 following its licensing in 2021. Safaricom Ethiopia business continues to struggle and is yet to break even, hence continues to require support from the shareholders Vodacom which is controlled by the UK-based corporation Vodafone, which has been the strategic investor in Safaricom since 1998. Vodacom continues to provide technical and management expertise to the Company and it has been a significant driver of the Company’s success,” said Mbadi.

He revealed to members of the two committees that as of March 31, 2025, Safaricom had 533,549 shareholders holding a total of 40 billion ordinary shares with Vodafone Kenya Limited having 16 billion shares (4O%), the National Treasury Cabinet Secretary 14 billion shares (35%), while others 1O billion (25%).

Mbadi told the joint committees that the Sh34 per share was the best price and was settled on after assessments using various metrics with the Treasury’s advisors on the valuation were the Kenya Commercial Bank Investment Bank, which gave a valuation report detailing various valuation methodologies.

The CS said the factors considered include the value of net assets, earnings, dividends and discounted cash flows, with the fact that it is a listed company making it easier because its price was more readily determinable.

“The average valuations based on earnings were Sh26, price to earnings was Sh17, discounted cash flow was Sh18.51, discounted dividend model was Sh23.61 and the weighted average over six months was Sh27.50 per share with the average price given by leading investment banks was Sh30.82; however, when the negotiations with Vodacom ended, the teams settled at Sh34, which will yield actual proceeds of Sh204.3 billion,” said Mbadi.

The CS said Kenya will also receive a dividend advance of Sh40 billion, in lieu of the Sh55 billion it would have received over the next six years, arguing that the Sh55 billion discounted at market rates is worth Sh29.3 billion, which means that the government will receive KSh10 billion more than it would have from the market. 

Mbadi told the legislators that if we look at it critically if Sh40 billion were invested at the market rate, it would grow to roughly Sh75 billion in six years, meaning the proposed repayment of Sh55 billion is Sh20 billion lower than the fair future value arguing that the transaction favours the government of Kenya both in present value and future value viewpoints.

Turkana South MP John Ariko asked Mbadi whether the minority shareholders had been consulted and whether the other shareholders were given the necessary information before Vodacom was sought to take over the shares of which Mbadi said the process was ongoing before the final decision is made.

Mosop MP Abraham Kirwa raised concerns the investor will control everything with a breach of private data which Mbadi said that is not the case stating said the government cannot influence the operations of Safaricom despite its 35 per cent ownership are assuring legislators that there will be no breach of data security just like it has never taken place with Airtel which is privately owned.

Nyaribari Masaba MP Daniel Manduku said the government should not do business wondering why it was not diversiting 1OO % of Safaricom instead of only 15% if at all the deal was good of which Mbadi responded that it was a better deal for the government since Vodacom was already the majority stakeholder.