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Kenya’s High Court has nullified the government’s KSh204.3 billion sale of a 15 percent stake in Safaricom PLC to South Africa’s Vodacom Group, ordering the shares to be restored to State ownership on behalf of the Kenyan people.
RELATED: Vodacom takes majority control of Safaricom in $2.1bn deal, redefining East Africa’s telecoms landscape
A three-judge bench delivered the landmark judgment on 15 September 2026, ruling that the transaction, completed on 30 June 2026, was undertaken in violation of Kenya’s Constitution and several laws governing public assets, procurement, capital markets and competition.
The ruling effectively reverses one of the Kenyan government’s biggest strategic asset transactions and requires the parties to unwind the deal, subject to the applicable refund arrangements.
Court Faults Lack of Public Participation
At the centre of the judgment was the court’s finding that the government failed to conduct meaningful public participation before proceeding with the divestiture.
The judges said parliamentary public hearings amounted largely to a procedural exercise because citizens were not provided with sufficient transactional information to properly assess the proposed sale.
The court held that the decision was a public policy matter subject to constitutional requirements, particularly Articles 10 and 201, which establish principles of transparency, accountability and public participation in governance and public finance.
“Based on our analysis, findings and holdings in respect of the various issues identified for determination, we are satisfied that the petitioners have proved on a balance of probabilities that the divestiture in question was undertaken and procured in contravention of the Constitution and the law,” the court said.
Adding:
“It was, therefore, invalid, null and void.”
Court Says Material Information Was Withheld
The High Court also criticised the government for what it described as “obscurities, misrepresentations and concealment of material information” surrounding the transaction.
According to the judgment, critical information—including details concerning the proposed purchaser, valuation reports and due-diligence findings—was not adequately disclosed during the approval process.
The judges said the lack of transparency prevented Parliament and the public from properly assessing the implications of the transaction.
The court relied on Article 2 of the Kenyan Constitution, which provides that any law, act or omission inconsistent with the Constitution is invalid.
Safaricom Sale Viewed as Effective Takeover
A major element of the judgment was the court’s rejection of the government’s characterisation of the transaction as a straightforward partial divestiture.
The judges found that the transaction, although presented as a sale of a 15 percent government stake, effectively resulted in a merger, acquisition and takeover that increased Vodacom’s effective ownership of Safaricom to 55 percent.
The court held that this raised issues under Kenya’s Capital Markets Act, Capital Markets (Takeovers and Mergers) Regulations, Competition Act and constitutional requirements concerning integrity, openness, transparency and accountability.
The judgment also found that the transaction violated principles of intergenerational and intragenerational equity and sustainable development.
KCB Investment Bank Advisory Role Also Challenged
The court further faulted the procurement of KCB Investment Bank Limited as transactional adviser to the government.
It found that the appointment breached constitutional procurement requirements under Article 227 and provisions of Kenya’s Public Procurement and Asset Disposal Act.
The bench subsequently quashed Session Paper Number Three of 2025, which provided the parliamentary framework for the divestiture.
It also nullified related merger, acquisition or takeover arrangements and regulatory approvals, exemptions and no-objection decisions connected to the transaction.
Government Stake Returns to 35 Percent
The ruling has significant implications for the ownership structure of Safaricom.
| Transaction | Before Sale | After Sale | Court Ruling |
|---|---|---|---|
| Government of Kenya | 35% | 20% | Restored to 35% |
| Vodacom Group | 40% | 55% | Reverted to 40% |
| Government shares affected | — | 15% | Returned to State ownership |
| Transaction value | — | KSh204.3bn | Transaction to be unwound |
The court specifically ordered that the 15 percent stake transferred to Vodacom be restored to the Government of Kenya on behalf of the people.
“A declaration is hereby made that the 15 per cent shares subject of the partial divestiture having been transferred in contravention of the Constitution and the law are hereby restored to the ownership of the Government of Kenya on behalf of the people of Kenya,” the court ruled.
Court Says Shares Can Be Restored
The judges rejected arguments that reversing the completed transaction would be practically irreversible.
They relied on an earlier 2026 Court of Appeal decision, which had established that the Safaricom shares could remain capable of restoration, with appropriate refunds made if a final ruling required reversal.
This earlier judicial position is significant because the transaction had already been completed on 30 June 2026 and the shares had subsequently been reflected in Vodacom’s ownership structure.
The High Court’s ruling therefore creates a legal pathway for the transaction to be unwound rather than allowing completion to prevent restitution.
KSh204.3bn Transaction Creates Fiscal Uncertainty
The decision could also create a new fiscal challenge for Kenya’s National Treasury.
The government had expected proceeds from the transaction to support public financing objectives, including infrastructure investment and debt management.
With the sale now declared invalid, the Treasury faces uncertainty over the timing and mechanics of any refund while the government works to restore its previous ownership position.
The ruling could also trigger wider scrutiny of how strategic public assets are valued, approved and divested in Kenya.
Safaricom Services Not Expected to Be Disrupted
Despite the dramatic ownership implications, the ruling does not in itself mean that Safaricom’s day-to-day operations will stop.
The judgment concerns the legality and ownership structure of the disputed government stake rather than the company’s operational management.
Safaricom’s telecommunications network, mobile services and M-Pesa operations are therefore not automatically placed under judicial control by the ruling.
The immediate challenge is instead the legal and financial process required to reverse the share transfer and restore the State’s 35 percent interest.
Landmark Test for Public Asset Sales
Beyond Safaricom, the judgment could have wider implications for Kenya’s approach to public asset sales.
By placing emphasis on meaningful public participation, disclosure of material information, procurement integrity and constitutional accountability, the High Court has established a significant judicial warning for future transactions involving strategic public assets.
The Safaricom case therefore goes beyond a dispute over a 15 percent shareholding. It raises a broader question about how governments balance fiscal objectives with constitutional obligations when disposing of assets regarded as strategically important to the public.
The court directed each party to bear its own costs, recognising the proceedings as public-interest litigation.
