Finance Minister John Mbadi stated on Wednesday that the Kenyan government plans to appeal the court ruling that led to the annulment of the deal to sell an additional 15% stake in Safaricom to Vodacom. Mbadi expressed confidence in the legality of this transaction and its connection to public interest, adding that they intend to fully present their argument during the appeal, and the National Treasury Service will actively defend this appeal.
Vodacom also announced its intention to file an appeal and request a stay of the decision pending the appeal hearing. For its part, Safaricom stated that it is reviewing the decision and its implications.
The $1.6 billion deal, announced last December and completed in June, increased Vodacom's stake in Safaricom to 55%, and the Kenyan government's stake to 20%. This operation was part of President William Ruto's efforts to strengthen public finances, as East Africa's largest economy faces annual debt payments that consume 40% of public revenue.
The three-judge panel ruled on Tuesday that the sale was unconstitutional and invalid, annulling all agreements, approvals, and arrangements related to it. The court ordered the return of the 15% stake to the government to be held on behalf of the citizens of Kenya.
The judicial panel found that the sale of such a large state asset constitutes a policy decision of the state, which, according to the constitution, must be presented to the public with sufficient information for consultation. It was established that neither the cabinet nor the national assembly met this standard. The court noted that the government demonstrated 'unexplained lack of transparency regarding the identity of the prospective buyer' and distorted and concealed material information throughout the process.
What is at stake
On June 30, the government sold over six billion shares of Safaricom to Vodafone Kenya at a price of 34 Kenyan shillings per share in a single block deal on the Nairobi Stock Exchange, generating revenue of 204.3 billion Kenyan shillings. Additionally, another 40.2 billion Kenyan shillings was received as an advance dividend from the 20% stake retained by Kenya. On the same day, Vodacom acquired the remaining stake of Vodafone International Holdings in Vodafone Kenya, raising its effective stake in Safaricom from 35% to 55%.
The 25% of shares belonging to investors on the NSE were not included in the sale and were unaffected by the orders issued on Tuesday. The main trial took place on June 29. The government closed the block deal the following day before the court's decision was rendered. When the Court of Appeal lifted the injunction on June 26, it did not rule on the legality of the sale—it explicitly stated that the deal could be overturned if the petitioners succeeded.
Since June 30, Safaricom has changed its status in Vodacom's accounts from an associate accounted for at fair value to a consolidated subsidiary. This transition formed the basis for increasing the group's medium-term revenue forecast and boosting revenue ambitions to over 300 billion by 2030.
Vodacom also began exercising the control it acquired. Safaricom shareholders approved changes to the company's articles of association, granting Vodafone Kenya the right to appoint directors proportionally to its stake and participate in shortlisting the next CEO of Safaricom—these resolutions were passed thanks to the 55% stake.
Following the ruling on Tuesday, Vodacom's shares dropped to 151 rupees on the JSE within minutes, representing nearly 4% below Monday's close, before recovering and closing the day at 156 rupees, down 0.6%. Safaricom traded at 36.50 Kenyan shillings in Nairobi, higher than the 34 Kenyan shillings set by the government in June.