What does the ruling mean for the direct sale of a public stake, public participation and control of critical telecoms infrastructure?
A state-asset sale has been declared invalid
Kenya’s High Court has voided Vodacom Group’s purchase of a 15% government stake in Safaricom, putting a KES 204.3 billion deal at risk less than three months after it closed. A three-judge bench ruled that the government withheld key information from the public, cabinet and parliament, and misrepresented the transaction. Although presented as a partial divestment, the court found that it gave Vodacom control of Safaricom and amounted to a takeover. The judges ordered the 15% stake returned to the government on behalf of Kenyans. Vodacom’s ownership had risen to 55% from 39.9%, including the government stake and a further 5% effective interest acquired through Vodafone Kenya.
The court rejected the approval route
The ruling also struck down the process used to approve the sale. Parliament held hearings in 30 counties, but the share purchase agreement and the arrangement covering future dividends were not made public. The court said those hearings did not amount to reasonable, meaningful and purposive public participation. This is important beyond the transaction itself: for a disposal of a public asset, participation is not simply a matter of holding meetings. The public and lawmakers must have access to material information about what is being sold, to whom, on what terms and with what consequences. The court therefore treated the undisclosed agreements as central to whether the approval process met constitutional standards.
Direct negotiation came under scrutiny
The judges questioned why the government sold the shares directly to Vodacom rather than using a competitive process to identify a strategic investor. In procurement terms, a direct sale can be a deliberate route, but it requires a clear explanation of why competition was not used and how value was protected. The court rejected the government’s justification for the KES 34 per share price, which relied on an independent valuation by KCB Investment Bank and was described by the state as carrying a market premium. It also challenged the decision to raise KES 40.2 billion by selling rights to future dividends from the government’s remaining 20% stake, finding that the arrangement exchanged a long-term income stream from a public asset for an upfront payment.
Control of critical infrastructure added a security test
The court gave national security a separate role in assessing the transaction. Safaricom operates M-PESA, supports government payment systems, provides infrastructure for election transmission and holds personal data belonging to millions of Kenyans. The judges said safeguards from the Communications Authority and the Office of the Data Protection Commissioner could not replace a national security assessment before effective control of such infrastructure moved to a foreign company. The government has said it will appeal to the Court of Appeal. The High Court declined to suspend the judgment immediately and directed the government, Vodacom, Safaricom and the Attorney General to apply for a stay. The earlier decision allowing the sale to proceed had also left open the possibility of reversal if the transaction was later found unlawful.
IN NUMBERS
The ruling now places Vodacom’s majority control of Safaricom, along with the KES 244.5 billion in proceeds and future dividend rights tied to the transaction, in a new legal battle. No final outcome on the appeal has been established. For businesses and public authorities, the case underlines how a state-asset transaction can be assessed not only on price, but also on transparency, competition, public participation and control of strategically important infrastructure.
Reported from techcabal.com, 2026-09-15. The Tender Wire is published by Otnox.
