NAIROBI, Kenya Jan 13 – National Treasury Cabinet Secretary John Mbadi has defended the decision by the government to sell a 15percent stake in Safaricom to Vodacom, saying it presents better value than the company’s current share price on the Nairobi Securities Exchange (NSE).
Mbadi told a joint parliamentary committee that the terms offered to shareholders are more attractive than what investors would receive by trading the stock on the open market.
He explained that the government’s decision to avoid a second Safaricom IPO was driven by concerns over market saturation, pricing risks and the need to attract foreign currency inflows.
Speaking on the rationale behind the move, Mbadi noted that the government is already preparing to introduce another major state asset, the Kenya Pipeline Company (KPC), to the market. He warned that offering multiple large assets simultaneously could destabilise the market.
“We are already taking another major asset into the market which is the KPC. If we took this one also to the market that would lead to market saturation and it would hurt our pricing in the market,” the CS said.
He urged shareholders and regulators to assess the deal based on fundamentals, including future earnings and strategic positioning.
“So again if you sold it especially local investors we would not attract sufficient hard currency and we would have lost out in the advantages of forex inflow in into the country,” Mbadi added.
The government frames the move as non-tax revenue mobilisation, with proceeds serving as seed capital for the National Infrastructure Fund and the Sovereign Wealth Fund.
The government will receive Sh204.3 billion from selling 6.01B shares, reducing its ownership from 35% to 20% while retaining 2 board seats. The government included some conditions for the sale, including that Vodacom must consult the government before any expansions outside Kenya.
Vodafone Kenya will also pay the government Sh40.2B upfront for the right to collect dividends on the government’s remaining 20% stake, functioning as a dividend-secured loan expected to last roughly four years at current payout levels.
Currently, Vodafone Kenya is Safaricom’s largest shareholder, holding 16 billion shares, equivalent to 40 per cent.
The planned transaction will increase its stake to 55 per cent. The 15 per cent stake on sale, comprising 6,009,814,200 shares, is expected to generate about Sh240 billion, while the government will retain a 20 per cent stake representing 8,012,758,380 shares.
