Kenya's Court of Appeal has suspended High Court orders that halted the government's planned sale of a 15% stake in Safaricom to Vodacom, clearing the way for the $1.58 billion transaction to proceed while constitutional challenges continue.
A three-judge bench lifted conservatory orders issued by the High Court on 18 May, which had frozen the transaction pending petitions challenging the disposal of the government's shareholding.
The ruling is a significant legal victory for President William Ruto's administration, which argued the delay threatened fiscal planning, infrastructure funding and investor confidence.
The government plans to sell 15 percentage points of its 35% stake in Safaricom to Vodacom for about US$1.58 billion, with proceeds earmarked for infrastructure projects, budget support and long-term national savings.
Court documents also refer to an upfront payment of about $310 million linked to future dividends.
The National Treasury, Ministry of Information, Communications and the digital Economy, Attorney-General and Privatisation Commission argued the injunction had stalled a time-sensitive commercial transaction.
They warned prolonged uncertainty could prompt Vodacom to renegotiate the price, delay the deal or withdraw altogether, reducing foreign investment and disrupting economic planning.
The government also argued no sale agreement had yet been signed and that the transaction remained subject to statutory and regulatory approvals, making the conservatory orders premature.
Safaricom supported the government's application, arguing the suspension delayed access to funding intended for public investment.
The company also argued the shares would remain traceable and the transaction could be reversed should the constitutional petitions ultimately succeed.
The constitutional challenge was brought by activists Tony Gachoka, Professor Frederick Ogola, Samuel Kahara Macharia and Paul Maina Mugo.
They argue the proposed sale breaches constitutional requirements governing the disposal of public assets, lacked adequate public participation and transparency, and undervalues the government's shares by pricing them at KES34 each ($0,26).
The petitioners also contend the transaction would give Vodacom majority control of Safaricom while reducing the government's stake to 20%, raising concerns over control of strategic communications infrastructure.
Gachoka opposed the government's application, arguing the conservatory orders should remain in place until the legality of the transaction had been determined.
He dismissed the government's claims of investor uncertainty and fiscal prejudice as speculative, arguing the public interest also includes transparency, accountability and the lawful management of public assets.
The petitioners' legal team said it would seek relief in the Supreme Court, alleging the Court of Appeal heard the government's application before all parties had been properly served and that they were given only two hours to prepare after the issue was raised.
The ruling builds on recent regulatory momentum for the transaction.
As previously reported by ITWeb Africa, the Common Market for Eastern and Southern Africa Competition Commission approved the proposed acquisition after concluding it was unlikely to substantially lessen competition in the regional market.
The deal still requires approvals from Kenya's Competition Authority, Capital Markets Authority and Communications Authority, alongside any remaining parliamentary and regulatory approvals before it can be completed.
The Kenyan government has also attached conditions to preserve Safaricom's local identity after the sale.
These include requiring the company's chairperson and CEO to remain Kenyan citizens, protecting the Safaricom brand, limiting workforce restructuring outside the ordinary course of business and safeguarding local suppliers for at least three years after the transaction closes.
The constitutional petitions remain before the High Court, although the government may now proceed with the transaction unless Kenya's Supreme Court grants a further stay.
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