Vodacom has announced plans to challenge a Kenyan High Court ruling that invalidated its acquisition of a 15% stake in Safaricom from the Kenyan government.
The South African telecoms group said it will appeal the decision at the Court of Appeal and seek a stay of the ruling while the appeal is being considered.
The development puts the $1.9 billion transaction under renewed legal scrutiny and creates uncertainty around the ownership of the stake.
Court orders return of 15% Safaricom stake
The Kenyan High Court ruled that the government’s sale of the 15% stake was unlawful, ordering that the shares be restored to the Kenyan government.
A three-judge panel comprising Francis Gikonyo, Roselyne Aburili and Tabitha Ouya found that key transaction documents, including the share-purchase agreement and a dividend-rights agreement, had not been disclosed for public scrutiny.
The court also questioned the process through which Vodacom was selected as the buyer, noting the absence of a competitive selection process.
The judges concluded that the divestiture had been conducted contrary to Kenya’s Constitution and public-finance laws and declared the transaction invalid, null and void.
Vodacom seeks stay pending appeal
Following the ruling, Vodacom said it would lodge an appeal and apply for a stay of the decision pending the outcome of the case.
If the appeal ultimately fails, the Kenyan government could be required to return the funds received from the transaction.
The potential reversal could have significant implications for Kenya’s public finances, as proceeds from the sale were expected to support government spending and infrastructure development.
How the Safaricom deal happened
In December, Vodacom agreed to increase its stake in Safaricom from 40% to 55% by acquiring 15% of the Kenyan government’s holding.
The transaction would have reduced the government’s stake in Safaricom to 20%.
As part of the wider transaction, Vodacom also agreed to acquire Vodafone International Holdings’ remaining 12.5% interest in Vodafone Kenya, making Vodacom the sole owner of the Kenyan entity.
The government’s 15% Safaricom stake generated approximately 204.3 billion Kenyan shillings ($1.6 billion), alongside another 40.2 billion shillings ($300 million) through the securitisation of future dividends.
The immediate next step is Vodacom’s appeal at the Court of Appeal.
The legal dispute follows an earlier stage of the transaction in which the Kenyan High Court had initially blocked the sale, before the Court of Appeal overturned that decision and allowed the transaction to proceed.
The latest ruling therefore reopens the legal debate around the government’s disposal of its Safaricom shares and the process used to complete the transaction.
For now, the ownership of the 15% stake remains subject to the ongoing legal proceedings.
