Kenya is preparing to execute what could become East Africa’s largest corporate transaction in recent history. The government plans to sell a huge chunk of its remaining 34.9% stake in Safaricom, the region’s telecom giant, with the hope of raising KES 149 billion ($1.1 billion) before June 2026.
At current market prices of Sh19.90 per share, even a modest sale of 5-10% of the government’s holdings would generate between KES 39.8 billion and KES 79.7 billion.
However, Safaricom’s stock is trading at what experts consider “deep discounts” to its fair value. This presents both a challenge and an opportunity that could determine whether Kenya maximizes its windfall or leaves money on the table.
Treasury Cabinet Secretary John Mbadi hasn’t minced words about the stakes. With Kenya avoiding new taxes in its latest Finance Bill, selling Safaricom shares is the government’s best shot at hitting its ambitious privatization target.
“There is talk that if we could offload more of our ownership of Safaricom, where we are likely to get the KES 149 billion through privatization,” Mbadi told Business Daily, indicating just how central this deal is to the country’s fiscal strategy.
The last time Kenya sold Safaricom shares was in 2008, and it was a spectacle at the time. The IPO was oversubscribed by 532%, with investors clamoring for a piece of the 25% stake (10 billion shares) that raised KES 51.75 billion for the Treasury. That success story carries a lot of weight as the government considers its options for round two.
This time around, though, the playbook might look different. Analysts are pushing for an off-market transaction rather than another public offering, and their reasoning is compelling.
Wesley Manambo from Standard Investment Bank explains, “The most prudent approach given the current market pricing would be an off-market transaction, similar to what we have seen recently in the banking sector where interested shareholders purchase a block at a premium to the market rate.”
Global private equity firms are circling African telecom assets like sharks sensing blood in the water. The appeal is simple: telecoms offer predictable revenues and steady cash flows that can service the debt typically used to finance these massive acquisitions.
For PE firms with deep pockets and patient capital, Safaricom is a rare opportunity to own a piece of one of Africa’s most successful telecom stories.
This international interest could drive up the sale price considerably, especially if the government opts for a competitive auction process among high-net-worth investors rather than a public market sale.
What makes Safaricom such an attractive target is the M-Pesa revolution that has transformed how East Africans handle money. This mobile money platform, combined with robust data services, has turned Safaricom into a consistent dividend-paying machine.
The company’s latest financial results prove this strength, as net profit grew 7.2% to KES 45.7 billion in the year ending March 2025, even while absorbing losses from its challenging Ethiopia expansion. Safaricom proposed a total dividend of KES 1.20 per share, translating to KES 16.8 billion flowing directly to government coffers.
The irony, though, is that by selling its stake, the government would be giving up this annual dividend stream. It’s a classic trade-off between immediate cash and long-term income, which speaks to the country’s pressing fiscal needs.
Safaricom’s Ethiopian adventure adds both risk and potential to the investment equation. Since launching in 2022 in Africa’s second-most populous nation, the company has faced security challenges, inflation, and currency headwinds.
Regardless, management remains bullish, projecting that losses will fall steeply and earnings could surge up to 50% as the Ethiopian market matures.
For potential buyers, Ethiopia is either a cautionary tale about expansion risks or a massive growth opportunity in a market of over 120 million people. How investors view this wild card could significantly impact the final sale price.
While the government’s privatization ambitions extend beyond Safaricom shares, options are limited. Kenya Pipeline Company (KPC) may be the only other viable candidate that could contribute meaningfully to the KES 149 billion target. As Mbadi notes, KPC is “profit making” and already structured as a limited liability company, making it privatization-ready.
The bigger challenge here is that after years of mismanagement and losses, most state-owned enterprises have become liabilities rather than assets. This makes Safaricom’s value even more critical to the government’s fiscal strategy.
The country is now facing a delicate balancing act with market timing. Rush the sale of Safaricom shares, and they might accept a lower price in today’s discounted market. Wait too long, and other fiscal pressures might force their hand anyway.
The government needs to fund a total expenditure of about KES 4.2 trillion, with privatization proceeds expected to complement KES 3.3 billion from taxes and levies.
What’s more, the retail investor angle adds a whole other dimension. If the government offers meaningful discounts, Manambo suggests there could be “good interest from the retail market,” given current interest rate trends. However, flooding the market with shares could depress prices, potentially reducing the total amount raised.
