Safaricom shareholders back changes as State cedes control

Safaricom shareholders have approved landmark governance changes that formalise the end of State dominance in East Africa's most profitable company.

They also backed a record Sh80.13 billion dividend that will deliver a multi-billion-shilling windfall to the cash-strapped National Treasury at the company's 18th Annual General Meeting held on Friday.

The final dividend of Sh1.15 per share, approved yesterday, brings the total payout to Sh2.00 per share, a 66.7 per cent increase from the previous year's Sh1.20 and the largest corporate dividend declaration in Kenya's history.

For the cash-strapped Treasury, which still holds 35 per cent of the company pending the completion of the stake sale process to Vodacom, the payout represents a significant fiscal boost at a time when public debt consumes about 40 per cent of annual revenues.

The government is expected to earn approximately Sh28 billion from the total dividend, including Sh11.92 billion from the interim dividend of Sh0.85 per share paid in March and an estimated Sh16.1 billion from the final dividend.

The AGM approved sweeping changes to Safaricom's Articles of Association that give effect to the new shareholding structure, marking the end of an era of state dominance that began when the company was founded in 2000 as a joint venture between the Kenyan government and Vodafone.

Under the new governance structure, Vodafone Kenya Ltd, a subsidiary of South Africa's Vodacom Group, gains the power to nominate Safaricom's chief executive, while the board is directed to encourage "the retention of a predominantly Kenyan character in the Senior Management and Executive Committee of the Company."

Vodacom now holds 55 per cent of Safaricom, following the government's sale of a 15 per cent stake, with the investing public retaining the remaining 25 percent. The government received Sh204.3 billion from the stake sale, plus an additional Sh40.2 billion upfront payment for future dividend rights on its remaining 20 per cent shareholding.

"The completion of the transaction increasing Vodacom Group's shareholding in Safaricom this year deepens a partnership that goes back to our earliest years, and gives us access to the scale, expertise and regional reach of one of Africa's leading technology groups as we build towards 2030," said Adil Khawaja, chairman of the board.

The government retains veto rights over any material change to Safaricom's brand identity and any expansion into new territories outside Kenya and Ethiopia, ensuring a continued strategic voice despite its reduced stake.

Safaricom's record dividend was backed by its strongest financial performance yet. The telecommunications giant reported a 36.9 per cent increase in net profit to Sh95.6 billion in financial year 2026, up from Sh69.8 billion previously. Group revenue rose 11.2 per cent to Sh388.7 billion, driven by double-digit growth in Kenya and strong momentum in Ethiopia.

M-Pesa, the world's largest mobile payment system, generated Sh182.7 billion in revenue, processing transactions worth Sh41.68 trillion, equivalent to 2.4 times the size of Kenya's economy.

The company now keeps over 72 million customers connected across Kenya and Ethiopia, supporting more than 1.3 million jobs directly and indirectly.

"This has been a defining year for us. We marked 25 years of connecting and driving transformation through our services and community involvement. We did this while delivering our strongest financial performance yet," said Peter Ndegwa, Group CEO.

Safaricom Ethiopia more than halved its losses in the year to March 2026 to Sh21.2 billion, supported by an improved macroeconomic environment and tariff reviews on voice and data services implemented in late 2025. The unit grew its three-month active subscriber base to 14.7 million as of June 2026, representing a 46.1 per cent year-on-year increase.

"The Ethiopia business has a clear trajectory towards break-even supported by healthier industry dynamics," Ndegwa said. The company expects its Ethiopian operations to break even by March 2027.

Safaricom, Ndegwa said, is positioning itself to grow beyond a traditional telecom operator into a broader technology company. Its priorities include using artificial intelligence to serve customers better, expanding high-speed broadband and 4G and 5G coverage, and putting affordable smartphones into millions more hands, alongside the continued growth of M-Pesa.

The final dividend will be payable on or about 4 September 2026 to shareholders on the register of members as at the close of business on 4 August 2026 (next week). Including this year's payout,

Safaricom shareholders will have received approximately Sh280 billion in cumulative dividends over the past five years.

Shareholders also re-elected Edward Okaro to the board and re-appointed Ernst & Young as the company's external auditors, as well as approving several special resolutions giving legal effect to the new shareholding structure.