Banks want control of Vodacom Group in the proposed divestiture of the government’s 15 per cent stake in Safaricom tamed.
In its submission to Parliament, the Kenya Bankers Association (KBA) wants five percent of Safaricom shares to be reserved for the public, arguing that the move would broaden ownership and strengthen participation in Kenya’s capital markets.
The bankers lobby says the proposal aligns with efforts to deepen financial markets and unlock shareholder value as the government exits mature state-owned enterprises.
In practical terms, banks are lobbying the Parliament to have the government sell 300.4 million Safaricom shares to the public and dispose of the remaining 5.7 billion shares to Vodacom Group Limited.
This will see Vodacom Group control 49 per cent of the country’s leading telco instead of 55 per cent if the transaction sails through.
The government plans to sell six billion Safaricom shares to a South African giant at Sh34 per share, representing a 15 per cent stake and a 23.6 per cent premium over the six-month volume-weighted average price as of December 2025.
In the proposed deal currently before the Parliament, the Kenyan government will receive Sh204.3 billion from the share sale, as well as an upfront Sh40.2 billion in dividends on its remaining 20 per cent stake, bringing total proceeds to Sh244.5 billion.
Vodafone will receive Sh68.1 billion for its shares.
Currently, the government holds a 35 per cent stake in Safaricom, valued at close to Sh300 billion.
After the transaction, its shareholding will fall to 20 per cent, while Vodacom’s stake will increase to 55 per cent, consolidating shares previously held by the government and Vodafone.
“Although banks support the divestiture, the sector recommends that five per cent of the shares under divestiture be reserved to the public to broaden public ownership and participation in this national key asset,” KBA chief executive, Raimond Molenje, said.
If Parliament approves the KBA proposal, the 300.4 million shares could be offered to the public for Sh10.2 billion, giving institutional investors an opportunity to acquire large blocks, while retail investors would continue to buy shares on the open market.
This is the second time the issue of absolute control of Safaricom, regarded as a strategic firm for the country’s economic and security asset is being raised in the planned divestiture.
Parliamentarians put the National Treasury CS, John Mbadi, to task over fears that the sale could weaken state control over Kenya’s most strategic telecommunications asset when he appeared in Parliament on Tuesday.
Mbadi assured them that all was well, saying that concerns about foreign ownership should be separated from security considerations.
He noted that technical and management expertise provided by Vodacom, a subsidiary of UK-based Vodafone, has been central to Safaricom’s success without undermining state authority.
Supporting the government’s move for partial sale of Safaricom ownership, KBA stated that the plan is consistent with the Privatisation Act, 2005, which provides a framework for the transparent and efficient sale of government stakes in public enterprises.
The lobby argues that increasing the free float of Safaricom shares, while allocating a significant portion to a strategic investor, would enhance liquidity and market participation on the NSE.
“Ultimately, Safaricom is positioned to benefit from improved corporate governance and investor confidence, resulting in a stronger value of the company for the shareholders,” KBA said.
It adds that the free float of Safaricom shares would enhance liquidity and market participation on the Nairobi Securities Exchange (NSE).
During the week, several other state and non-state agencies presented their views on the proposed sale, with some, like the Institute of Certified Public Accountants of Kenya (ICPAK), Law Society of Kenya (LSK) and Institute of Economic Affairs (IEA), opposing the valuation process.
Although it said that the non-debt revenue-raising measure was good, the accountants’ body termed the valuation methodology “opaque,” warning that taxpayers could be losing billions in a deal that smells of desperation rather than strategy.
“Safaricom shares traded at a high of Sh44.70 just a few years ago. By locking out other bidders and avoiding the open market, the Treasury has failed the basic test of price discovery. You cannot claim optimal value when you are only talking to one buyer,” ICPAK Chairperson, Elizabeth Kalunda during a session with the Parliamentary Finance Committee.
The Auditor General, on her part, warned that Kenya risks losing billions in long-term revenue if the government proceeds with its plan to sell part of its Safaricom stake to Vodacom.
Auditor General Nancy Gathungu cautioned that requiring Vodacom to make an upfront payment of Sh40.2 billion instead of receiving future dividends could shortchange the government’s remaining 20 per cent stake. She explained that the move would effectively convert a steady income stream into a one-off payment.
The Capital Markets Authority (CMA), the Competition Authority of Kenya (CAK) and the Communications Authority of Kenya said the divestiture was sound and could unlock value for minority shareholders.
The capital markets regulator, led by CEO Wycliffe Shamiah, said the agreed price of sH34 per share for the 15 per cent stake being acquired by Vodacom was competitive and could only realistically be achieved through a block sale.
by VICTOR AMADALA
