The High Court has ordered a 15% Safaricom stake returned to the Kenyan government after finding that the KSh204.3 billion transaction breached constitutional and legal requirements.
Kenya’s High Court has thrown out the government’s $1.6 billion Safaricom stake sale to Vodacom, ordering the 15% shareholding transferred earlier this year to be returned to the state.
The ruling, delivered on September 15, 2026, puts one of Kenya’s biggest privatisation deals in years back into legal uncertainty just months after the transaction was completed.
A three-judge bench found that the divestment did not meet constitutional and legal requirements, with the judges raising concerns over public participation, transparency, the valuation process and the way the transaction was presented to state institutions.
The government and Vodacom have both said they will appeal, meaning the ownership battle is far from over.
Court overturns Safaricom stake sale
At the centre of the case is the government’s sale of a 15% stake in Safaricom for KSh204.3 billion, equivalent to roughly $1.6 billion.
The shares were sold at KSh34 each.
Before the transaction, the Kenyan government owned 35% of Safaricom. The sale reduced that holding to 20%.
Vodacom, meanwhile, increased its effective interest in Safaricom to about 55% after completing a wider transaction that also included an additional 5% effective interest acquired from Vodafone Group.
That wider Vodacom transaction was valued at about $2.1 billion.
The High Court case, however, focused on the Kenyan government’s 15% divestment.
Why the High Court cancelled the deal
The judges found that the process leading to the Safaricom stake sale did not provide adequate and meaningful public participation.
For a transaction involving such a valuable public asset, the court said the government was required to provide citizens with enough information to understand what was being proposed and to participate meaningfully.
The bench also found problems with how details of the deal were presented.
According to the judgment, material information concerning the transaction was either concealed or misrepresented during the process.
The judges ultimately declared the divestment unconstitutional, invalid and void.
Their order requires the 15% stake to be restored to the Government of Kenya on behalf of the Kenyan public.
Court viewed the transaction as more than a simple share sale
One of the most important parts of the ruling was the court’s view of what the transaction actually represented.
The government had treated it as a partial divestment of its Safaricom shares.
The judges, however, found that the wider arrangement had the effect of giving Vodacom control of Safaricom and therefore had characteristics of a merger, acquisition and takeover.
Following completion of the wider transaction in June, Vodacom’s effective shareholding increased to about 55%.
Vodacom itself said at the time that the increase would allow it to consolidate Safaricom in its financial statements.
The High Court found that the structure therefore had to be considered alongside laws governing takeovers, mergers and competition rather than being viewed solely as an ordinary government share disposal.
Questions raised over the KSh34 share price
The court also examined how the government arrived at the KSh34-per-share valuation.
The judges questioned the sequence through which the price was determined and later supported by transaction advisers.
According to the judgment, the KSh34 figure had already been settled on before KCB Investment Bank was appointed to carry out transaction advisory and valuation work.
The court found that this raised concerns about whether the subsequent valuation process was genuinely independent.
It also questioned the procurement of KCB Investment Bank, finding that the government had not demonstrated that the adviser had been selected in accordance with the required procurement rules.
These findings became another reason for the court to conclude that the transaction could not stand.
The deal had already been completed
The legal complication is that the shares had already changed hands by the time the High Court delivered its judgment.
The transaction was completed on June 30 after Kenya’s Court of Appeal lifted earlier conservatory orders that had temporarily stopped the sale.
Vodacom then announced that its effective interest in Safaricom had risen to approximately 55%.
That allowed the South African telecoms group to treat Safaricom as a controlled subsidiary for accounting purposes rather than simply an associate.
The High Court has now ordered the government’s 15% portion returned.
How and when that happens will depend heavily on the appeals process and whether the courts grant orders temporarily suspending implementation of the judgment.
Vodacom says it will appeal
Vodacom moved quickly after the ruling.
The company said it would challenge the decision at Kenya’s Court of Appeal and seek a stay of the High Court judgment while that appeal is heard.
The Kenyan government is taking the same route.
Treasury Cabinet Secretary John Mbadi confirmed on September 16 that the government would appeal the judgment and defend the transaction.
The government has since filed a notice of appeal, according to local reporting.
That means the High Court ruling is unlikely to be the final word on who ultimately owns the disputed shares.
There was more than KSh204bn involved
The KSh204.3 billion share purchase was only one part of the government’s wider arrangement with Vodacom.
The state also received about KSh40.2 billion upfront in connection with future dividends attached to its remaining Safaricom shares.
That took the government’s total expected proceeds from the broader package to around KSh244 billion.
The government had planned to use proceeds from the Safaricom divestment as part of the financing for its National Infrastructure Fund.
Treasury documents describe the fund as a vehicle intended to support major projects in sectors such as roads, railways, energy and water.
The court ruling therefore raises questions not only about Safaricom’s ownership but also about how the government handles money already received from the deal if the judgment ultimately stands.
Safaricom is caught in the middle
Safaricom was not simply waiting for the transaction to happen.
By September, the deal had already been completed and its ownership structure had changed.
Following the High Court ruling, Safaricom said it was reviewing the judgment and its implications.
The company noted that the transaction had been completed on June 30 after the Court of Appeal lifted the earlier conservatory orders and all remaining conditions had been met.
Safaricom also said the dispute remained subject to legal proceedings and that further information would be provided when appropriate.
The company’s day-to-day operations in Kenya and Ethiopia continue while the ownership dispute moves through the courts.
Why Vodacom wanted a bigger Safaricom stake
Safaricom is one of the most valuable telecoms businesses in Africa and one of Kenya’s most important listed companies.
Its mobile network dominates the Kenyan market, while M-PESA has grown far beyond a simple mobile money transfer service into a major digital payments platform.
For Vodacom, increasing its stake offered a way to deepen its exposure to East Africa and bring Safaricom fully into its group accounts.
When the deal closed in June, Vodacom described Safaricom as a major telecommunications, financial services and technology business and said the acquisition strengthened its East African presence.
That strategic value helps explain why Vodacom intends to challenge the High Court decision rather than simply unwind the transaction.
The government also has a lot at stake
For Kenya, the case is about more than who owns Safaricom shares.
The ruling touches on how the government sells valuable public assets and what level of consultation, disclosure and regulatory scrutiny must come before such transactions are completed.
The High Court’s decision makes clear that large state divestments can be challenged even after money has changed hands if the courts find that constitutional requirements were not followed.
At the same time, the government’s appeal means its own arguments will now be tested again at a higher court.
Until that process is completed, the final ownership position remains unsettled.
What happens next
The immediate focus shifts to the Court of Appeal.
Both Vodacom and the Kenyan government are challenging the High Court judgment, and Vodacom has indicated that it will seek to have the ruling suspended while the appeal is determined.
That could leave the existing ownership arrangement in place temporarily while the legal process continues.
If the High Court judgment is eventually upheld, the government’s 15% stake would have to be restored and the financial consequences of unwinding the transaction would have to be addressed.
If the ruling is overturned, the June transaction could remain in force.
For now, the court has made one thing clear: the KSh204.3 billion Safaricom stake sale cannot simply be treated as settled.
What began as one of Kenya’s largest recent asset sales has now become a major legal test over public participation, transparency and the rules governing the disposal of strategic state investments.
