South Africa’s Vodacom Group is seeking to acquire part of the government’s stake in Safaricom in a deal that could see the Johannesburg-based firm take majority control of the Kenyan tele-coms operator.
Vodacom Group has informed investors that it will bid for an extra Safaricom share as the State seeks to reduce its stake in a privatisation plan.
The government has announced plans to sell a mega stake in Safaricom in efforts to raise billions of shillings from the privatisation of State enter-prises and cut reliance on debt to plug budget deficits.
It retained a 34.9 percent stake in the Nairobi bourse-listed firm worth Sh418 billion after selling a 25 percent stake to investors via an initial public offering (IPO) in 2008. Vodacom Group has a 39.9 percent stake in Safaricom.
The sale promises the largest trans-action in the region as global private equity (PE) firms prowl Africa for tele-coms deals, attracted by their predict-able revenues and steady cash flows, which can then be used to service the debt taken on to buy the company.
Vodacom Group CEO Mohamed Josub said the South African firm expects the Kenyan government to reach out with an offer.
“In terms of increasing stakes, we look at any market where our partners want to sell, we would consider it,” Mr Josub told investors during the group's 2026 second-quarter earnings call.
“And of course, we'd expect that they would talk to us, as we've been partners for a very long time… If there is a want to sell, I'm sure they'll talk to us.”
Vodacom Group previously increased its stake in Safaricom through an all-share deal with its UK parent, Vodafone Plc, in 2017.
Safaricom’s IPO was oversubscribed by 532 percent after the State sold the 25 percent stake, or 10 billion shares, earning Sh51.75 billion for the Treasury.
Analysts expect a scramble for the additional sale of the government stake in Safaricom. Safaricom’s stake sale could take the form of a secondary IPO or an auction to a high-net-worth investor for a block sale.
A second offer occurs when an investor sells their shares to the public on the secondary market after the first offer, with proceeds going directly to the pockets of the investor.
The sale of 10 percent of the government’s stake in the telco would yield Sh119.6 billion at the prevailing share price of Sh29.90.
Analysts have favoured an off-market transaction if the government is to unlock the maximum possible return from the planned divestiture.
This involves sales to high-net-worth investors like telecoms operators and PE funds that offer a premium to the market price.
Vodacom Group seems to prefer this route, which could see the State offer it preference in the purchase of the shares. The State has been short of entities deemed ripe for privatization as the bulk of them are struggling after years of loss-making and mismanagement.
Apart from Safaricom, Kenya Pipeline Company (KPC) is seen as the only other viable firm that can help the State move closer to the Sh149 billion target.
Safaricom remains the region’s most profitable firm, riding on the back of data and M-Pesa, which has seen the operator consistently pay dividends.
Safaricom reported a 52.1 percent rise in its half-year profit to Sh42.7 billion, helped by a smaller loss in Ethiopia and M-Pesa’s double-digit growth.
Its net profit grew from Sh28.11 billion the previous year, and it expects to declare an interim dividend in February. The firm paid a dividend of Sh1.20 a share, representing a windfall of Sh19.2 billion and Sh16.8 billion for Vodacom and the Exchequer.
Safaricom — Kenya’s biggest mobile carrier with close to two-thirds of the country’s subscribers — is valued at Sh1.196 trillion.
The Kenya business continued to be the main profit driver on the back of M-Pesa, the firm’s largest unit and on course to generate half of the telco’s revenues.
Its reported loss in Ethiopia dropped by 59 percent compared to the first half of the previous financial year, which was heavily impacted by a depreciation of the birr currency.
The loss in Ethiopia that is attributed to Safaricom dropped to Sh15.2 billion from Sh19.4 billion in the same period a year earlier, translating to a gain of Sh4.2 billion.
Safaricom launched in Ethiopia in 2022 as the government opened up the tightly controlled economy to foreign competition and is hoping its presence in Africa's second-most populous country will power future growth.
Its diversification from the saturated voice and SMS business is paying off, with M-Pesa, mobile data and fixed internet emerging as sales drivers.
Safaricom’s revenue rose to Sh199.9 billion in the six months to September, from Sh179.9 billion in the same period a year earlier, reflecting a 11.1 percent growth.
Revenue from mobile financial service M-Pesa rose to Sh88.1 billion from Sh77.2 billion previously, reflecting a growth of 14 percent.
The voice business recorded a 0.5 percent decline in revenues to Sh41 billion, marking a big shift as mobile data for the first time overtook sales from calls.
Revenue from mobile data, where Safaricom has been aggressively fighting for market share, rose 18.2 percent to Sh44.4 billion, while fixed internet to homes and offices rose 10 percent to Sh9.1 billion.
