MPs launch probe into State Sh244b Safaricom stake sale

Safaricom Headquarters on Waiyaki Way in Nairobi. [File, Standard]

The National Assembly will on Monday kick off a multi-sector inquiry into the government’s controversial sale of a 15 per cent stake in telecoms giant Safaricom to South Africa’s Vodacom, summoning a wide range of industry, legal and civil society actors to testify.

Two parliamentary committees will conduct a nine-day series of hearings to scrutinise the transaction.

The hearings, to be conducted by the Departmental Committee on Finance and National Planning and the Select Committee on Public Debt and Privatisation, will feature testimony from more than 40 entities.

Vodacom Group Ltd, the South African subsidiary of Britain’s Vodafone Group, agreed last December to acquire an effective 20 per cent of Safaricom’s issued share capital.

Under the deal, Vodacom will acquire 15 per cent from the Kenya government for Sh204 billion and five per cent from Vodafone for Sh68 billion.

Upon completion of the acquisition, Safaricom’s shareholding will comprise Vodacom (55 per cent), the government (20 per cent) and public investors (25 per cent).

In early December, Parliament invited Kenyans to submit memoranda on Sessional Paper No. 3 of 2025 on the partial divestiture of Safaricom PLC.

National Treasury Cabinet Secretary John Mbadi submitted the Sessional Paper to the National Assembly, which referred it to the committees on Finance and National Planning and on Public Debt and Privatisation for consideration and reporting to the House.

The government is seeking to sell a 15 per cent stake in Safaricom, a move expected to raise more than Sh244.5 billion. The proposal has sparked divided opinion amid concerns over possible undervaluation and a lack of transparency.

Civil society

Direct market participants, including Safaricom, rival operators Airtel Kenya, Telkom Kenya and Jamii Telecommunications, as well as the Safaricom Dealers Association, are scheduled to present their views on the first day of the hearings on Wednesday.

They will be followed by financial, legal and advisory firms such as Deloitte & Touche, PricewaterhouseCoopers (PwC), KPMG, Ernst & Young, Bowmans, Andersen and Anjarwalla & Khanna LLP.

Human rights and transparency organisations, including Amnesty International Kenya, the Kenya Human Rights Commission (MUHURI) and Transparency International Kenya, are also slated to appear before the committees.

Labour interests will be represented by the Central Organisation of Trade Unions (COTU), while public interest law groups Kituo cha Sheria and the Institute for Social Accountability are also on the list.

The sale is expected to raise Sh204.3 billion based on a proposed share price of Sh34, representing a 17 per cent premium on the six-month weighted average price. This, the government says, will enable it to realise optimal value from its investment.

The transaction also includes an upfront payment of Sh40.2 billion by Vodacom to the government in lieu of future dividends accruing from the State’s remaining 20 per cent stake.

Bad deal

Mbadi has defended the sale as a key plank of President William Ruto’s agenda to “innovatively unlock capital” for infrastructure development without raising taxes or increasing public debt.

However, the breadth of the inquiry reflects deep-seated concerns.

Financial experts expected to testify, including the Association of Stockbrokers of Kenya and the Institute of Economic Affairs, are likely to question the valuation, arguing that it may not fully capture Safaricom’s growth potential in Ethiopia and its fintech ecosystem, where M-Pesa revenue grew by 14 per cent in the last half-year.

Riverside Advisory’s Deepak Dave has previously described the sale as “a bad deal”, arguing that it hands Vodafone-Vodacom effective control and future lucrative options, such as a potential M-Pesa spin-off, while Kenya forfeits future valuation gains.

“The State has moved from a powerful blocking minority to a more passive investor, just as the company stands on the cusp of its next major phase of value creation,” a Nairobi-based analyst earlier told The Standard.

Critics have also warned that reducing State influence could weaken oversight of M-Pesa, a de facto national payments system previously flagged as a potential systemic risk.

Grossly undervalued

The hearings, which will include testimony from groups as diverse as the Blockchain Association of Kenya and the Federation of Kenya Employers, are expected to shape parliamentary opinion as the deal awaits regulatory approvals in Kenya, Ethiopia and South Africa, with completion anticipated in the first quarter of the year.

Kiharu MP Ndindi Nyoro has raised concerns, saying the proposed share price of Sh34 is “grossly undervalued”, noting that Safaricom shares traded at Sh45 in 2021, when the company was valued at Sh1.8 trillion.

“We need robust public participation on the sale of Safaricom because selling it at Sh34 per share is undervaluation and would be a gross injustice to Kenyans,” Nyoro said. “The government is also seeking dividends in advance, which risks sacrificing future revenue for short-term political gain.”

However, Majority Leader Kimani Ichung’wah accused Nyoro of misleading the public even before the Sessional Paper was tabled.

According to Ichung’wah, anyone with substantive views should present them before the committees.

“Take time to appear before the Finance and National Planning Committee and table your facts. The facts will speak for themselves. Only last year, Safaricom shares were trading at Sh17,” he said.

“We invite Kenyans to have their say so that we can reason together for the good of the country. Let us not allow bitterness or the desire for revenge to override common sense and logic.”