Treasury Cabinet Secretary John Mbadi has defended the Government’s decision to sell a 15 per cent stake in Safaricom to Vodacom, saying the move will allow the State to retain a significant interest in the company while protecting its shareholding from future dilution.
Appearing before a joint committee of the National Assembly reviewing the proposed transaction, Mbadi said the sale would help the Government unlock maximum value from an investment it has built over more than two decades. He noted that increasing capital needs in large companies pose a risk to fully State-owned entities, particularly at a time when fiscal pressures limit the Government’s ability to fund major investments.
According to Mbadi, shrinking fiscal space means the Government may struggle to inject capital into businesses even when the returns are certain or efficiency gains are clear, due to the country’s reduced capacity to take on additional debt. Divesting part of its Safaricom stake, he said, reduces this risk while maintaining a strong presence in the company.
The National Treasury was the first to brief Members of Parliament sitting on the Departmental Committee on Finance and National Planning together with the Select Committee on Public Debt and Privatisation. The committees are overseeing the deal, which has already received Cabinet approval and is undergoing public participation.
Mbadi said selling the shares to Vodacom guarantees immediate cash inflows, business stability, and continuity in Safaricom’s operations. He added that Vodacom brings long-term strategic strength and the financial muscle needed to support future growth while absorbing higher risks.
The Cabinet Secretary emphasized that the transaction carries no settlement risk, citing Vodacom’s strong balance sheet and experience in successfully executing similar investments. He noted that Vodacom, which is majority owned by Vodafone, has demonstrated long-term commitment to Kenya, having entered the market in 1998 and remained invested since then. By contrast, Safaricom’s main competitor has changed ownership several times over the same period.
Despite the sale, Mbadi said the Government will continue to exercise oversight through its remaining 20 per cent shareholding, supported by established regulators including the Communications Authority, the Central Bank, the Office of the Data Protection Commissioner, and the Competition Authority. He stressed that in the telecommunications sector, regulation rather than shareholding is the primary tool for public oversight.
To safeguard national interests, the Government negotiated several protections, including two seats on Safaricom’s board, continuity of governance structures, retention of the Safaricom name and brand, and a commitment that no job losses linked to the transaction will occur within three years. The agreement also ensures that key leadership positions—such as the chairperson, CEO, and independent directors—remain Kenyan, alongside continued support for the Safaricom Foundation.
On valuation, Mbadi told lawmakers that the agreed price of KSh34 per share followed extensive assessments by Treasury’s advisors, including Kenya Commercial Bank Investment Bank. The valuation considered Safaricom’s net assets, earnings, dividends, and discounted cash flows, with the company’s listed status making market pricing more transparent.
Various valuation approaches produced estimates ranging from KSh17 to KSh27.50 per share, while leading investment banks placed the average value at KSh30.82. Following negotiations, both parties settled on KSh34 per share, resulting in total proceeds of KSh204.3 billion (approximately $1.576 billion).
In addition, the Government will receive an upfront dividend payment of KSh40 billion, replacing an estimated KSh55 billion that would have been paid over the next six years. Mbadi said that when discounted to present value, the KSh55 billion amounts to KSh29.3 billion, meaning the advance dividend delivers a financial gain to the State.
He added that if the KSh40 billion were invested at prevailing market rates, it could grow to about KSh75 billion over six years, making the proposed deferred payments significantly less attractive by comparison. In both present and future value terms, he said, the transaction favors the Government.
Mbadi concluded that the deal aligns with the Government’s broader strategy to rely more on non-tax revenues to fund priority projects in areas such as energy, roads, aerospace, water, and digital infrastructure. He said Kenya is at a critical economic juncture and must adopt innovative financing approaches to sustain progress in inflation control, interest rates, currency stability, and overall economic growth.
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