A silent but extremely significant power shift is unfolding inside Safaricom, and most Kenyans have not yet understood its full impact.
The public announcement issued on December 3 appears technical and routine, but buried in the text is a restructuring that could permanently alter who controls Sub Saharan Africa’s most profitable company. If Parliament, the courts and the public do not intervene, another major legal battle is almost guaranteed.
Vodafone Kenya Limited is buying 15 percent of Safaricom from the Government of Kenya at KSh 34 per share, a massive KSh 204.3 billion transaction. At the same time, Vodacom Group will increase its ownership of Vodafone Kenya to 100 percent, gaining an additional 4.99 percent indirect stake in Safaricom. When the dust settles, Vodafone Kenya which is fully owned by Vodacom Group will control 55 percent of Safaricom. That is a controlling majority. That is veto power. That is strategic dominance over Kenya’s largest taxpayer and the backbone of the financial technology ecosystem. Once that level of control is established, reversing it becomes almost impossible.
Meanwhile, the Government of Kenya drops from 35 percent to 20 percent. This means the State is no longer the strongest counterweight to foreign interests within the company. Public institutions such as NSSF also lose strategic leverage. The new reality is that a foreign entity will hold more voting power, more influence over the board and more authority over long term strategic decisions. Whether intended or not Kenya has effectively given up real control of its most important digital infrastructure company.
Even more concerning is the dividend buyout clause. Vodafone will pay KSh 40.2 billion upfront to acquire the rights to future Safaricom dividends that would have been paid to the Government. The Treasury gets quick cash today but loses steady long term revenue for years ahead. It is the kind of short term relief that appeals to a cash stressed government but it weakens the country’s fiscal position in the future. This is how countries slowly lose economic sovereignty. Not at once, but one desperate financial year at a time.
This raises a political question that cannot be ignored. Why sell such a large stake now Why at a premium Who gains the most from this timing The offer price of KSh 34 which is 21 percent above the market price proves that Vodafone is acquiring control not merely increasing an investment. No rational investor pays that kind of premium unless strategic dominance is the target. At a time when Safaricom shares have surged 96 percent this year why is the Government giving away long term revenue for one off payments Why is a national digital backbone being treated as an ordinary commercial asset These are questions that will not only stir public outrage but also fuel litigation and heavy debate in Parliament.
Vodafone Kenya claims it does not intend to take over Safaricom. However once a shareholder crosses 35 percent the transaction falls under takeover considerations in Kenyan law. At 55 percent Vodafone is far above that line. The company has already included a request for exemption from takeover rules which shows they know the legal implications. Activists will challenge this. Minority shareholders may challenge valuation. Parliament will question disposal of a strategic asset. Courts will be forced to determine whether national security or data sovereignty is threatened. The stage is set for another long and bitter Safaricom court fight.
Safaricom is not just a telecom operator. It is Kenya’s biggest taxpayer the foundation upon which M Pesa operates a national security asset the digital backbone of the economy and the most profitable company in Eastern and Central Africa. Allowing control of such an institution to shift quietly to a foreign group without national consultation is extremely risky. Safaricom must remain structurally Kenyan. This is not an anti investment stance. It is a call to preserve sovereignty over the infrastructure that keeps the country functioning. Once Vodacom crosses 55 percent Kenya loses its only effective veto power. And once that power is gone it will not return.
This transaction checks every trigger point for legal action. It involves a strategic national asset foreign majority control premium valuation that implies a takeover probable breaches of competition and public finance laws and a surrender of long term dividends. Kenya has fought over Safaricom before but this time the stakes are far higher.
The public announcement looks routine but the implications are enormous. A foreign shareholder will soon control Safaricom the Government becomes a junior player future revenue is traded for instant cash and national sovereignty over digital infrastructure is weakened. This is the largest ownership restructuring in Safaricom’s history executed quietly during a moment of fiscal desperation and minimal scrutiny.
If Kenyans do not step in now the story of how the country lost Safaricom will be written long after the ink on this deal has dried.
