Court again, declines to stop Sh204b Safaricom sale to Vodacom

The High Court has for the second time declined to issue orders halting the government's planned sale of a 15 per cent stake in Safaricom to Vodacom Group, valued at Sh204.3 billion, pending a petition filed by Tony Gachoka and Fredrick Ogola.

In a brief ruling, Justice Lawrence Mugambi rejected the petitioners' plea for conservatory orders pending the hearing of an application by Safaricom, which seeks to have two related cases consolidated.

“In view of the issues raised in this matter, it would be prudent for this court to consider the application for consolidation first before deciding on any other application in this matter. After consolidation, the parties are at liberty to bring any other application,” Justice Mugambi ruled.

The judge, however, ordered Safaricom to serve all parties with its application for the consolidation of the three matters filed so far challenging the sale.

The decision came after Safaricom's lawyer Mukite Musangi informed the court of two other similar petitions already filed in a separate court challenging the share sale.

“Your Honour, we urge the court, before considering the application by the petitioners seeking conservatory orders, to have this matter be consolidated with two other petitions, number E831 and E836, before any application is heard, including the petitioners seeking conservatory orders,” Musangi submitted.

The court was also informed that Vodacom, through its lawyer Aisha Abdallah, has filed an application to be struck out of the proceedings, an application the judge said will be heard after the consolidation issue is determined.

The petitioners' lawyer, Soyinka Lempaa, had urged the court to issue interim orders pending the hearing of all applications filed, warning that without conservatory relief, the government could proceed with the sale and render the petition a mere academic exercise.

“If the court finds any illegalities, it will be extremely hard to reverse,” Lempaa cautioned.

Gachoka, a veteran journalist alongside governance expert and economics professor Fredrick Ogola, filed a constitutional petition at the Milimani High Court challenging what they term an illegal transaction that threatens national sovereignty and security.

In their court papers, the petitioners claim the government is selling 6,009,814,200 shares at Sh34 per share when the estimated fair value ranges between Sh70 and Sh80 per share, potentially exposing Kenya to losses of over Sh250 billion.

“The said price is grossly undervalued and appears to have been poorly and selectively negotiated by the 1st, 2nd, 3rd, and 4th Respondents, to the grave detriment of the Kenyan public, given the prevailing and intrinsic market value of the shares,” the petition states.

The activists have sued the Cabinet Secretaries for National Treasury and Information Communication, alongside the Communications Authority, Competition Authority, the Attorney General, Safaricom PLC, and Vodacom Group as respondents.

The petitioners note that Safaricom contributes approximately Sh18 to 20 billion annually to government revenues, making the proposed sale price particularly troubling.

“The intended sale has been undertaken without any public participation, and the process is rushed, opaque, non-competitive, and procedurally irregular, thereby significantly prejudicing the interests of the Kenyan public,” the petitioners argue.

A central concern raised in the petition is the concentration of market power.

Vodacom's Kenyan subsidiary already holds 35 per cent of shares in the telecommunications sector.

If the sale proceeds, Vodacom Group would effectively acquire a controlling interest of approximately 55 per cent, while government ownership would decline to 20 per cent.

The transaction would also reduce government board representation to just two seats.

The activists warn that this development threatens Kenya's strategic control over critical national infrastructure, including data systems, mobile money platforms, and competition policy, and exposes sensitive financial and security sectors to undue foreign influence.

“The entire transaction bears hallmarks of a well-orchestrated scheme bordering on legalised corruption, designed to benefit a foreign private entity at the expense of the people of Kenya,” Gachoka states in his supporting affidavit.

The petitioners argue the sale violates multiple constitutional provisions, including Articles 1, 10, 227, and 238, which govern sovereignty, national values, public procurement, and national security, respectively.

They contend that Kenyan institutional and retail investors have been unfairly excluded from the opportunity to acquire the shares.

Among the reliefs sought, the petitioners want the court to declare that government shares in Safaricom constitute strategic national infrastructure that cannot be sold to a foreign entity.

The two petitioners also seek orders quashing any agreement between the Treasury and Vodacom and compelling the government to conduct a full public participation, require competitive bidding and independent valuation, and declare that the sale cannot proceed without parliamentary approval.