The government's plan to sell part of its ownership in Safaricom has received a major boost after the Court of Appeal lifted orders that had brought the multi-billion-shilling transaction to a halt, allowing the process to move forward as legal battles over the deal continue.
In a ruling delivered on Friday, the appellate court suspended conservatory orders issued by the High Court that had temporarily stopped the proposed sale of a 15 per cent stake in Safaricom Plc to Vodacom Group.
The judges said the State had satisfied the conditions required for the grant of a stay and found that public interest weighed heavily in favour of allowing the transaction process to proceed.
“Having fully and thoroughly considered this application, we come to the conclusion that it satisfies the two limbs of arguability and nugatory (meaningless), and that the public interest compellingly demands that the stay sought be granted. We accordingly grant it,” the judges ruled.
The decision marks a setback for petitioners Tony Gachoka and Fredrick Ogola, who had moved to court seeking to stop the government's planned disposal of shares in the telecommunications giant.
The proposed transaction is estimated to be worth more than Sh200 billion and follows approval by the National Assembly.
MPs had adopted a joint report by the Departmental Committee on Finance and National Planning and the Public Debt and Privatisation Committee, authorising the government to offload the 15 per cent stake. The sale is expected to generate about Sh240 billion earmarked for infrastructure projects.
Despite parliamentary approval, the plan soon faced legal challenges after Gachoka and Ogola questioned how the transaction was being undertaken.
In their petition, the two argued that the proposed price did not reflect the true value of the shares. They cited estimates placing the intrinsic value of Safaricom shares at between Sh70 and Sh80 each.
They further faulted the level of information released to the public regarding the transaction.
Court documents show that the petitioners raised concerns over the absence of a clearly outlined competitive bidding process, lack of details on the valuation approach used and failure to disclose advisers involved in determining the proposed sale price.
“The intended sale has been undertaken without meaningful public participation, contrary to the Constitution,” the petition states.
Those arguments persuaded a three-judge High Court bench comprising Justices Francis Gikonyo, Roselyne Aburili and Tabitha Ouya to issue conservatory orders suspending the transaction pending determination of the case.
The judges noted that the petition had raised constitutional and public interest questions that required examination by the court. Among the issues highlighted were concerns relating to data sovereignty, public participation and other legal matters surrounding the proposed disposal of the shares.
The government later challenged the orders at the Court of Appeal through the Attorney General.
In its application, the State argued that the High Court had prematurely stopped the process, insisting that the transaction had not been concluded and that the petitioners had not demonstrated any harm that could not be addressed if the matter proceeded while the case was being heard.
While allowing the State's application, the Court of Appeal emphasised that it was not making a final determination on the legality of the proposed sale.
Instead, the judges found that the appeal raised legitimate issues for consideration and held that there was no basis for keeping the conservatory orders in force as the dispute continues before the courts.