Vodacom secures control of Safaricom after court clears Sh204 billion deal

Vodacom has officially taken control of Safaricom after finalising a multibillion-shilling share purchase that increases its ownership in the telecommunications firm to 55 per cent, bringing to a close a transaction that had been delayed by a court dispute.

The South African company confirmed the completion of the acquisition on Tuesday, only days after the Court of Appeal lifted orders that had stopped the sale from proceeding.

The move follows an agreement announced in December for the purchase of part of the government's stake in the Nairobi Securities Exchange-listed company.

With the transaction now concluded, the National Treasury is set to receive Sh204.3 billion from the disposal of a 15 per cent shareholding in Safaricom. Together with an advance dividend arrangement worth Sh40.2 billion, the deal is expected to generate a total of Sh244.5 billion for the government.

The Sh204.3 billion payment comes from the sale of six billion shares at Sh34 each, while the Sh40.2 billion advance dividend was arranged as a loan secured against the State's remaining 20 per cent stake in the company.

“This is a landmark moment for Vodacom, for Safaricom, and for the communities we serve across East Africa. Acquiring majority ownership in Safaricom strengthens our position as a market leader, while at the same time unlocking new opportunities to drive digital and financial inclusion at scale in Kenya and Ethiopia,” Vodacom Group CEO Shameel Joosub said.

The Treasury has indicated that the funds will be directed towards infrastructure development, budget financing, fiscal stability and national savings.

The completion of the transaction will, however, see the government miss out on Sh16.1 billion in final dividend earnings linked to its previous 35 per cent stake. Those benefits will now go to Vodacom because the shares changed ownership before the August 4 book closure date.

The sale had been put on hold after the High Court issued orders freezing the transaction following a petition filed by Tony Gachoka and Fredrick Ogola.

The two petitioners challenged the sale in court, naming several government agencies, Safaricom and Vodacom Group as respondents. They argue that the disposal of the shares failed to meet constitutional standards on the sale of public assets, lacked adequate public participation and transparency, and did not reflect the true value of the government's stake.

Although the Court of Appeal has allowed the transaction to proceed, the legal battle is expected to continue after the petitioners announced plans to seek intervention from the Supreme Court.