Kenya’s crown jewel has changed hands in the most lucrative state asset sale in the nation’s history, but celebrations at the National Treasury may be premature.
The transfer of a 15 per cent government stake in Safaricom to Vodafone Kenya for 244.5 billion shillings has ignited a fierce debate over whether Africa’s most profitable telecommunications company has been systematically undervalued and surrendered to foreign control for a fraction of its worth.
At the heart of the controversy lies a fundamental question: what is Safaricom truly worth? The government is selling six billion shares at 34 shillings each, representing a 21 per cent premium over the closing market price.
Treasury Cabinet Secretary John Mbadi has hailed this as shrewd fiscal management, but Kiharu Member of Parliament Ndindi Nyoro has branded the transaction daylight robbery, insisting the telecommunications giant should be valued at no less than 2.5 trillion shillings.
The mathematical discrepancy is staggering.
At current market prices, Safaricom’s valuation hovers around 1.13 trillion shillings.
Yet if Nyoro’s assessment holds water, the government is offloading its stake at a discount that borders on the catastrophic.
His proposal would have seen the company restructured into three separate entities, valued independently, before any sale proceeded.
What makes the valuation debate particularly acute is M-Pesa, the mobile money platform that has become synonymous with financial innovation across the developing world.
Standard Investment Bank analysts have estimated the financial services division alone contributes 60.6 per cent of Safaricom’s total valuation.
The platform processed 37.15 billion transactions worth 38.29 trillion shillings in the last fiscal year, generating 161.1 billion shillings in revenue with growth rates exceeding 15 per cent annually.
Independent valuations from Standard Investment Bank suggest a fair value of 36.38 shillings per share, representing 82.8 per cent upside from previous price levels.
Other fintech experts have placed M-Pesa’s standalone value at approximately 10 billion dollars, yet this crown jewel has been bundled into a transaction that values the entire Safaricom entity at considerably less than the sum of its parts.
The timing of the sale raises uncomfortable questions. Kenya is careening towards a budget deficit of 901 billion shillings for the 2025 to 2026 fiscal year, with ordinary revenue collection already 90 billion shillings below target in the first quarter.
The government needed cash urgently, and Vodafone Kenya appears to have capitalised on this desperation.
The transaction structure tells its own story. Beyond acquiring the 15 per cent stake for 204.3 billion shillings, Vodafone Kenya is paying an additional 40.2 billion shillings upfront for the right to receive future dividends from the government’s remaining 20 per cent shareholding.
This advance dividend mechanism amounts to 6.69 shillings per share, effectively allowing the foreign corporation to purchase years of future income streams at today’s prices.
Meanwhile, Vodacom Group Limited is simultaneously consolidating its control by purchasing the remaining 12.5 per cent stake in Vodafone Kenya from Vodafone International Holdings for 68.1 billion shillings.
When the dust settles, Vodafone Kenya will control 55 per cent of Safaricom, transforming what was once a state-backed national champion into a foreign-majority enterprise.
The political ramifications extend beyond simple mathematics. The decision to execute this as a negotiated private transaction rather than a public offering through the Nairobi Securities Exchange has effectively locked retail and institutional local investors out of the largest equity transaction in Kenya’s history.
While Safaricom’s initial public offering in March 2008 was oversubscribed by 532 per cent, raising 51.75 billion shillings from ordinary Kenyans, this latest disposal has been conducted behind closed doors.
The broader privatisation agenda compounds these concerns.
The recently enacted Privatisation Act of 2025 has sparked intense legal and political battles, with critics arguing it concentrates excessive power in the National Treasury while diminishing parliamentary oversight. Opposition members of parliament have already threatened court challenges, with Deputy Minority Leader Robert Mbui describing the process as an auction of strategic national assets.
President William Ruto’s government has identified 65 state-owned enterprises for potential privatisation, including Kenya Pipeline Company, which controls the nation’s fuel distribution network.
Legal challenges from civil society organisations such as the Centre for Litigation Trust argue that these reforms bypass constitutional checks and balances, rushing through transactions without meaningful public participation.
The government insists the 244.5 billion shillings from Safaricom will seed a new National Infrastructure Fund and Sovereign Wealth Fund, financing airports, energy projects, water systems and roads without resorting to additional taxation or borrowing.
But sceptics note that Kenya has heard similar promises before, watching as proceeds from previous privatisations vanished into the general budget without transforming infrastructure or reducing debt burdens.
Safaricom itself remains extraordinarily profitable.
The company reported a 52.1 per cent surge in net profit to 42.7 billion shillings for the half year ending September 2025, driven by M-Pesa’s double-digit growth and reduced losses in its Ethiopian operations. Since its listing in 2008, the Treasury has drawn approximately 550 billion shillings in dividends from the company, making it one of the most lucrative investments in the public purse.
The firm has also remitted a cumulative 1.57 trillion shillings in duties, taxes and fees.
Yet despite this stellar performance, Safaricom’s share price has languished well below its 2021 peak of 44.6 shillings, closing at 28.20 shillings on the eve of the transaction announcement.
Analysts attribute this persistent discount to macroeconomic headwinds, regulatory uncertainties and investor concerns about the Ethiopian market, but the timing allows Vodafone Kenya to acquire strategic control at historically depressed valuations.
The government has secured certain undertakings from Vodafone Kenya, including commitments to avoid employee redundancies except in the ordinary course of business, preserve both the Safaricom Foundation and M-Pesa Foundation, and ensure all foundation trustees remain Kenyan citizens.
Management and board operations will continue as before, with the government maintaining its 20 per cent strategic stake.
These safeguards may prove cold comfort if the fundamental valuation was flawed from the outset. Comparative analysis with other mobile money platforms reinforces suspicions of undervaluation.
India’s Unified Payments Interface processed 14 billion transactions in July 2025 alone across a network of 12,000 fintech applications built on public infrastructure.
Brazil’s Pix instant payment system handled 1.3 trillion dollars in transactions during 2023, achieving 76 per cent adoption without private intermediaries.
M-Pesa, by contrast, remains tethered to Safaricom’s commercial imperatives, charging fees that critics describe as extractive.
Yet its dominance is unquestionable.
With control of 91 per cent of Kenya’s mobile money market and a 65 per cent share of telecommunications subscribers, Safaricom has become essential national infrastructure masquerading as a private enterprise.
The transaction requires approval from multiple regulatory bodies, including the Cabinet, National Assembly, Capital Markets Authority, Communications Authority, Central Bank of Kenya, and competition authorities in both Kenya and the wider East African Community.
Vodafone Kenya has indicated it will seek an exemption from mandatory takeover provisions, arguing this represents a strategic investment rather than a full acquisition despite crossing the 50 per cent ownership threshold.
But these procedural hurdles may prove insufficient to address fundamental questions about valuation methodology and public interest.
The sale price of 34 shillings per share represents an 18.4 per cent premium over the 90-day volume-weighted average price and 33.9 per cent over the 180-day average.
Yet premiums are meaningless if the underlying market price has been artificially depressed by factors ranging from regulatory uncertainty to macroeconomic instability.
Kenya’s experience mirrors broader patterns across Africa, where state asset sales have delivered mixed results.
Nigeria, Ghana and Tanzania have all embarked on privatisation programmes in recent years, achieving short-term revenue boosts while generating longer-term social tensions over job losses and perceived unfairness.
The question is whether Kenya’s approach will prove exceptional or merely replicate these disappointments.
What remains clear is that Safaricom’s transformation from national asset to foreign-controlled enterprise represents a watershed moment for Kenya’s economic sovereignty.
Whether this proves a masterstroke of fiscal engineering or a cautionary tale of selling the family silver at bargain prices will depend on factors that extend far beyond the immediate cash injection.
The government argues it has maximised value while retaining strategic influence.
Critics counter that a company generating 161.1 billion shillings in annual revenue from its financial services division alone, processing nearly 40 trillion shillings in transactions, and dominating East Africa’s most dynamic market deserved either a higher valuation or retention in public hands.
The final reckoning may take years to materialise, but the immediate consequences are unambiguous.
Kenya has ceded majority control of its most valuable corporate asset to foreign interests, collected cash to plug short-term budget holes, and closed the door on retail investor participation in what should have been a landmark public offering.
Whether that represents shrewd pragmatism or strategic surrender depends on who is asking the question, and what they believe Safaricom is truly worth.
