Treasury Cabinet Secretary John Mbadi has defended the Government’s plan to sell a 15 per cent stake in Safaricom to Vodacom, saying the move will protect Kenya’s investment while unlocking billions for infrastructure projects.
Key Reasons for the Sale
- Prevent dilution: Mbadi told MPs the divestiture will shield government shares from future dilution as Safaricom raises capital.
- Optimum value: The stake has been nurtured for over 25 years, and selling now ensures maximum returns.
- Fiscal constraints: With limited debt capacity, government‑owned firms struggle to fund growth even when payoffs are certain.
Deal Structure
- Buyer: Vodacom, 65% owned by Vodafone, with a proven track record in Kenya since 1998.
- Price: KSh34 per share, above average market valuations.
- Proceeds: KSh204.3 billion ($1.576 billion) plus a KSh40 billion dividend advance.
- Safeguards:
- Two board seats for government.
- Retention of Safaricom brand.
- No redundancies for three years.
- Kenyan leadership for chairman, CEO, and independent directors.
- Continued support for the Safaricom Foundation.
Valuation Metrics
- Earnings: KSh26
- Price-to-earnings: KSh17
- Discounted cash flow: KSh18.51
- Dividend model: KSh23.61
- Six‑month weighted average: KSh27.50
- Investment banks’ average: KSh30.82
- Final negotiated price: KSh34
Government Position
Mbadi stressed the deal guarantees hard cash, minimal disruption, and a long‑term strategic partner willing to take higher risks. Regulators including the Communications Authority, Central Bank, Data Protection Commissioner, and Competition Authority will maintain oversight.
“This transaction favours the Government both in present and future value terms,” Mbadi said, noting that investing the KSh40 billion advance could grow to KSh75 billion in six years, compared to the KSh55 billion repayment initially expected.
The sale is part of Kenya’s strategy to use non‑tax revenue for priority infrastructure in energy, roads, aerospace, water, and digital transformation. Mbadi described it as critical to sustaining economic gains in inflation control, interest rates, currency stability, and GDP growth.
