Kenya's High Court has nullified the government's sale of a 15% stake in Safaricom to Vodacom Group, declaring the transaction unconstitutional and ordering that the shares be restored to the Kenyan state.

The ruling has thrown the future of Vodacom's increased control of Kenya's largest telecoms company into uncertainty just weeks after the transaction was completed.

A three-judge bench comprising Justices Francis Gikonyo, Roselyne Aburili and Tabitha Ouya ruled on September 15 that the divestiture breached constitutional and legal requirements.

The court ordered the 15% stake to be returned to the Government of Kenya on behalf of the public and quashed the approvals and agreements connected to the transaction.

But the ruling is unlikely to be the final word.

Vodacom has said it will appeal, while Kenya's National Treasury has also filed a notice of appeal. Vodacom is seeking a stay of the judgment while the appeal is heard.

That means the ownership dispute over one of East Africa's most important telecommunications assets is now heading into another stage of litigation.

The $1.6 billion transaction

The dispute centres on the Kenyan government's sale of its 15% holding in Safaricom.

The transaction was completed on June 30, 2026, after Kenya's Court of Appeal lifted a conservatory order that had temporarily blocked the sale.

The government sold the stake for KSh204.3 billion, equivalent to about $1.6 billion, at KSh34 per share.

The wider transaction also involved the government's future dividend rights attached to its remaining 20% holding.

The government received approximately KSh40.7 billion from the sale of those future dividend rights, bringing the proceeds from the two transactions to roughly KSh245 billion.

The sale formed part of Kenya's broader effort to monetise state assets and channel proceeds into its newly established National Infrastructure Fund.

How Vodacom gained control

The 15% government stake was only one part of Vodacom's broader effort to increase its ownership of Safaricom.

Before the transaction, Vodacom already had significant exposure to Safaricom through its ownership structure.

It also acquired the remaining shares in Vodafone Kenya, which increased its effective interest in Safaricom.

The combined transactions ultimately took Vodacom's effective ownership to about 55%, giving it majority control of the listed Kenyan telecoms company.

The High Court said the transaction was therefore more significant than a straightforward sale of a minority government stake.

According to the judgment, the divestiture effectively resulted in a merger, acquisition and takeover that transferred control of Safaricom to a foreign majority shareholder.

That distinction became central to the court's reasoning.

Why the court rejected the transaction

The judges identified several constitutional and legal problems with the process.

1. Public participation

The court found that the government had not carried out meaningful, reasonable and purposive public participation before disposing of the state asset.

Because Safaricom was considered a significant public asset, the judges held that the constitutional requirement for public participation applied to the transaction.

The court concluded that the process did not meet that standard.

The government has disputed this interpretation.

Treasury officials have pointed out that Parliament approved the transaction in March after public participation hearings and consideration of economic, fiscal, legal and national-security issues.

The government's appeal will therefore challenge the High Court's interpretation of whether the required constitutional process was satisfied.

2. Disclosure of the buyer and material information

The judges also criticised the government for what they described as the concealment or misrepresentation of material information surrounding the transaction.

The court specifically raised concerns about the identity of the proposed purchaser and how the transaction's implications were presented to decision-makers.

The judgment found that material information was not adequately disclosed during the process.

This became particularly important because the court viewed the transaction as effectively transferring control of a strategically important telecommunications company.

3. Safaricom's valuation and pricing

The court also questioned the process used to determine the price at which the government sold its shares.

The judges found the pricing process arbitrary and criticised aspects of the valuation and advisory process.

The court also found that procurement rules relating to transaction advisory services had not been properly followed.

The government sold the shares at KSh34 each.

Interestingly, Safaricom's market price was around KSh36.50 after the judgment, meaning the company's listed shares were trading above the price paid for the government's stake.

That market difference does not by itself establish that the government undervalued the shares, since market prices and negotiated block transactions can reflect different circumstances.

Competition concerns were also raised

The court also considered the implications of Vodacom gaining effective majority control of Safaricom.

The judges found that competition concerns had not been adequately addressed by regulators during the transaction.

That is significant because Safaricom is not an ordinary listed company.

It is Kenya's dominant telecommunications operator and the company behind M-Pesa, one of the world's most important mobile-money platforms.

A change in control therefore has implications beyond ordinary shareholder ownership.

It potentially affects telecommunications competition, mobile financial services and national digital infrastructure.

The court consequently quashed approvals, exemptions and no-objection decisions associated with the transaction.

The deal had already closed

The timing makes the ruling particularly consequential.

The court was not stopping a proposed transaction before completion.

The sale had already closed roughly 11 weeks earlier.

Vodacom had paid for the government's stake, acquired the additional ownership required for majority control and begun treating Safaricom as a subsidiary in its financial reporting.

The High Court nonetheless ordered the 15% government stake to be restored.

That creates a complicated legal and financial question: how exactly should a completed transaction be unwound while the buyer challenges the judgment?

Vodacom has therefore asked for the judgment to be stayed while its appeal proceeds.

Vodacom is fighting the ruling

Vodacom has confirmed that it intends to appeal the High Court decision to Kenya's Court of Appeal.

The company also plans to seek an order temporarily suspending implementation of the judgment while the appeal is considered.

That means the immediate consequence is uncertainty rather than an instant change in Safaricom's operating structure.

Until the appellate process develops, the practical status of the shares and Vodacom's control will remain subject to further legal proceedings and any stay orders.

The Kenyan government has taken the same route.

Treasury Cabinet Secretary John Mbadi said the government would challenge the judgment, arguing that the divestiture was lawful.

Safaricom is reviewing the judgment

Safaricom has also acknowledged the court ruling.

The company said it was reviewing the judgment and its implications, noting that the transaction had already been completed on June 30 following the lifting of the earlier conservatory orders and fulfilment of the relevant conditions.

Safaricom said further updates would be provided as appropriate while the legal process continues.

For the company itself, the most immediate issue is continuity.

Safaricom's network, customers, employees and operations continue regardless of the ownership dispute.

The bigger uncertainty is around the shareholder and governance structure at the top of the company.

What happens to Vodacom's control?

This is arguably the biggest question arising from the ruling.

Before the June transaction, Vodacom already had a significant interest in Safaricom.

The additional government stake pushed its effective ownership above 50%, giving it majority control.

The High Court has now ordered the 15% stake to return to Kenya's government and has quashed the merger, acquisition or takeover arising from the transaction.

If that ruling ultimately survives the appeal, Vodacom's effective control of Safaricom could be materially affected.

But it is too early to describe the final ownership structure because the government and Vodacom are appealing.

The appellate courts could uphold, modify or overturn parts of the High Court decision.

Why the case matters beyond Safaricom

The dispute is also about how governments sell valuable public assets.

Safaricom is one of Kenya's most strategically important companies, with telecommunications infrastructure and a mobile-money platform that reaches millions of people.

The case therefore raises broader questions about:

• how state assets are valued;

• how public participation should work;

• what information must be disclosed;

• how foreign control of strategic companies is assessed;

• how competition regulators should treat changes in control;

• and how completed government transactions can be unwound after a court finds the process unlawful.

The outcome could influence future Kenyan privatisations and state-asset transactions.

Investors are watching the appeal

The ruling initially sent Vodacom shares lower in Johannesburg before the stock recovered much of the decline.

The relatively limited closing move does not mean the judgment is insignificant.

Markets also have to consider the possibility that the ruling will be stayed or overturned on appeal.

Safaricom's share price, meanwhile, remained above the government's KSh34 sale price following the judgment.

That creates an unusual situation: the legal status of the transaction is contested even as the underlying listed company continues trading normally.

The next battle is in the Court of Appeal

The High Court ruling has changed the status of the Safaricom transaction, but it has not ended the dispute.

Vodacom and the Kenyan government are now pursuing appeals.

The immediate legal questions will include whether the High Court judgment should be stayed while the appeal proceeds and whether the appellate court agrees with the findings on public participation, disclosure, valuation, procurement, competition and the nature of the transaction.

Until those issues are resolved, Vodacom's expanded control of Safaricom remains under legal challenge.

What began as a KSh204.3 billion sale of a government stake has now become a much broader test of how Kenya handles strategic public assets and foreign control of nationally important companies.

The biggest story here is not simply that Kenya's Safaricom sale has been cancelled. It is that a completed $1.6 billion state-asset transaction has been pulled back into the courts over questions of constitutional procedure, transparency, valuation and control.

The High Court has ordered the 15% stake returned, but the story is far from finished.

Vodacom and the Kenyan government are appealing, and the eventual outcome could affect not only who controls Safaricom but also how Kenya structures future sales of strategic state assets.

For investors, the uncertainty is now legal rather than operational: Safaricom continues to function, but the ownership structure created by the June transaction is being challenged.

The next major development will be whether the Court of Appeal stays the High Court's orders — and ultimately whether it upholds or overturns the judgment.