The High Court has nullified the government’s sale of its 15 per cent stake in Safaricom to Vodacom Group, ruling that the Ksh204.3 billion transaction violated the Constitution and other laws.
A three-judge bench comprising Justices Francis Gikonyo, Roselyne Aburili and Tabitha Ouya ordered the 15 per cent stake to be restored to the government, finding that the divestiture was conducted without adequate public participation and involved concealment of material information.
The court also faulted the government over the pricing process and failure to adequately address national security concerns linked to the transfer of effective control of Safaricom to a foreign investor.
“In light of our findings above, we hold that there was no reasonable, meaningful and purposive public participation in respect of the divestiture, thus violating Articles 10 and 118 of the Constitution,” the judges said.
The ruling is a major setback to the government’s plan to raise funds for the proposed National Infrastructure Fund through the sale of state assets.
The government had agreed to sell its 15 per cent Safaricom stake for Ksh204.3 billion, equivalent to Ksh34 per share. It was also to receive about Ksh40.7 billion through the sale of future dividend rights on its remaining 20 per cent stake.
The case was filed by activist Tony Gachoka and other petitioners, who challenged the sale of what they described as a critical national asset.
The judges rejected an argument by Vodacom Group that the petitions had been overtaken by events following Parliament’s approval of the transaction on March 31, 2026, with the sale scheduled to take effect the following day.
The court held that the petitions challenged the constitutional foundation of the transaction and that subsequent parliamentary approval could not cure alleged constitutional violations.
Public participation
Although Parliament conducted public hearings in 30 counties, the court found that key documents relating to the transaction were not made available to the public.
These included the share purchase agreement and the agreement covering the future dividend rights.
The judges said public participation could not be reduced to the number of public meetings or hearings held, insisting that it must be meaningful, transparent and based on adequate information.
“Public participation must be qualitative, that is, real, purposive and meaningful,” the judges said, adding that the process must promote transparency, integrity, inclusivity and give the public an opportunity to influence decisions.
The court found that the government had failed to demonstrate that critical transaction documents were provided to the public before or during the parliamentary hearings.
The judges further ruled that the transaction had been presented to Parliament and the public as a partial divestiture, yet it involved a broader corporate restructuring that would give Vodacom effective control of Safaricom.
Under the arrangement, Vodafone Kenya’s stake in Safaricom would rise from about 39.9 per cent to 55 per cent, while Vodacom Group would acquire full ownership of Vodafone Kenya.
The court said the arrangement therefore amounted to a takeover rather than simply a sale of the government’s 15 per cent stake.
The judges also faulted the government for failing to subject the transaction to a competitive process for selecting a strategic investor.
They noted that Parliament’s joint committee report had acknowledged that competitive selection would have been preferable, but the government did not adopt such a process.
Court faults Ksh34 share price
The petitioners had argued that Safaricom was worth between Ksh70 and Ksh80 per share and that the government risked losing as much as Ksh250 billion through the transaction.
The government and other respondents maintained that the Ksh34 price represented a market-based premium and said KCB Investment Bank had been appointed as transaction adviser, with an independent valuation also conducted.
The court, however, found that the pricing process failed the rationality test and was arbitrary.
The judges also rejected the argument that selling future dividend income was simply a fiscal decision intended to finance infrastructure.
They held that converting future dividend income into an upfront payment deprived future generations of the long-term benefits of a public asset.
The court further found that the transaction raised serious national security concerns because Safaricom operates critical infrastructure supporting elections, government payment programmes, mobile money services and the personal data of millions of Kenyans.
“Based on the analysis above, we find that the divestiture removes the long-term sovereign control of a critical infrastructure, transforms regular and perpetual dividend income into an upfront single payment, dissipates public assets in the shares sold, thereby compromising the right of future generations from benefiting from the public assets,” the judges said.
The court ruled that transferring effective control of critical infrastructure to a foreign entity without first undertaking a national security assessment violated the government’s constitutional obligation to safeguard national security.
The judges rejected the argument that existing regulators, including the Communications Authority and the Office of the Data Protection Commissioner, provided sufficient safeguards.
They said regulatory oversight could not replace proactive measures to identify and mitigate national security risks before the government relinquished control of a strategic national asset.
Court declares deal a takeover
The High Court also found that the transaction had been structured as a share sale while effectively amounting to a merger and takeover, raising issues under the Competition Act and the Capital Markets Act.
The judges consequently declared the divestiture invalid, null and void.
They also quashed Parliament’s decision approving the sale, as well as related approvals, exemptions, agreements and other actions arising from the transaction.
The court ordered that the government’s 15 per cent Safaricom stake be restored to the ownership of the government of Kenya on behalf of the people.
The judges declined to suspend the judgment to allow the Attorney-General, Safaricom and other respondents to appeal.
Instead, they directed the parties seeking to challenge the decision to make a formal application for a stay.
