Safaricom shareholding change won't alter governance - Ndegwa

Safaricom has moved to allay fears on its structure if the partial divestiture by government is approved, saying that it will still remain a Kenyan-run company.

Safaricom Chief Executive Peter Ndegwa said the changes in shareholding will not affect their operations, adding that the proposed transaction does not alter Safaricom’s governance framework, regulatory oversight, or national jurisdiction and the Kenyan identity remains.

He made the remarks when he made presentations on Monday to the joint National Assembly committees of Finance and Planning, and Public Debt and Privatisation yesterday, amid concerns from various stakeholders on the future of Safaricom, given the sale of additional 15 per cent stake to a foreign company.

“Safaricom will continue to operate fully under Kenyan law. The company remains licensed, supervised, and regulated by Kenyan institutions, including the Communications Authority of Kenya, the Central Bank, Capital Markets Authority, the Competition Authority of Kenya, and other relevant regulators.

“Safaricom remains listed on the Nairobi Securities Exchange, and accountable to Kenyan enforcement mechanisms,” Ndegwa said.

According to the CEO, there is no transfer of operational control, dilution of regulatory authority or weakening of governance standards arising from this transaction and affirmed that Safaricom’s Board management structure, and decision-making frameworks remain intact.

At the same time, he explained that Vodacom is a strategic investor that is not new to Safaricom and has been a key partner in the telco’s regional journey, including entry into Ethiopia, bringing experience from multiple markets, technical expertise, and long-term investment capacity.

Ndegwa said Vodacom’s increased shareholding reinforces a long-term investment orientation and has been a key partner in Safaricom’s regional journey, including the entry into Ethiopia, bringing experience from multiple markets, technical expertise, and long-term investment capacity.

“Safaricom recognises that Kenyans rightly seek assurance that a company of national significance continues to operate in the public interest. Beyond structure and ownership, Kenyans care most about continuity of service, continuity of impact, and continuity of trust.

“At a practical level, this proposed shareholder transaction does not disrupt how Safaricom operates, how it is led, or how it engages the ecosystem that depends on it.

He said the leadership team remains in place and the staff continue to deliver day-to-day operations, and “the culture that has defined Safaricom for more than 25 years remains unchanged”.

But the MPs, led by the Finance committee chairperson Kuria Kimani, sought further assurance from the company on the share price currently standing at Sh34 and whether the offer could not be better. Similarly, the committee members sought to understand how Safaricom will remain a Kenyan company promoting local innovations as top priority in addition to ensuring that Kenyan security is not compromised, given that it holds crucial information for the country in terms of voice and data.

The committee also wanted to know how Safaricom will ensure safeguards and priority programmes are local as opposed to the group’s worldwide initiatives in addition to who receives the advance dividends payout and how it would affect local shareholders.

“How will you ensure that Safaricom remains ‘Kenyacentric’ and local innovations rather than worldwide inventions? Kenyans are worried about voice and data and whether their sovereignty is observed. The drive for Safaricom is ‘peoplecentric’ while Vodacom is purely profit driven, how will we ensure that they will now eat into the profits of the company?” Kuria posed.

With Homa Bay Town MP Peter Kaluma also asking: “Have you held ashareholders’ meeting to get their views and to disclose the transaction? Vodacom will have control, how will you protect the work you have been doing.

“What do they know that is urging them to give Sh34 per share and where do you see Safaricom’s growth prospects?”

But Ndegwa said they were not privy to the mechanisms that were used to determine the share price but based on trends, it could possibly be average trading price in last six months.

“From a governance perspective, Safaricom remains Kenyan-led, Kenyan-governed, and fully accountable to Kenyan institutions. Our strategic focus, management approach, and decision-making structures remain firmly in place, allowing us to stay focused on execution rather than transition,” the CEO said.

Earlier, human rights groups opposed the Safaricom divestiture, saying there is no need to hurry to sell off a strategic national asset that holds a dominant market position.

They said the proposed sale is constitutionally untenable, legally vulnerable to challenge, and contrary to the public interest.