Vodacom Seeks Majority Control in Safaricom

Kenya's National Treasury has initiated the sale of a 15 percent equity stake in Safaricom PLC to Vodacom Group. The transaction is valued at approximately Sh244.5 billion ($1.6 billion). This move would increase Vodacom's ownership in Safaricom to 55 percent. The deal requires approval from multiple regulatory bodies. These include the Communications Authority of Kenya and the Competition Authority of Kenya. The National Treasury currently holds 35 percent of Safaricom. Vodacom already owns 40 percent. The remaining 25 percent is publicly traded on the Nairobi Securities Exchange.

Why Data Sovereignty Fears Are Rising

Kenyan technology executives express concern about data control. Safaricom processes sensitive financial and personal information for millions of Kenyans. The M-Pesa mobile money platform handles over Sh8 trillion ($52 billion) in transactions annually. Safaricom's data centers store information on 42 million subscribers. Vodacom is majority-owned by Vodafone Group, a British multinational. Some experts worry that increased foreign ownership could compromise data localization efforts. Kenya's Data Protection Act requires certain data to remain within national borders. The Office of the Data Protection Commissioner would need to review the transaction's compliance.

Regulatory Hurdles and Timeline

The sale faces several approval stages. The Communications Authority must assess whether the deal meets licensing conditions. The Competition Authority will examine market concentration risks. Parliament's Finance and National Planning Committee may hold hearings. Industry analysts predict a 6-9 month review process. The National Treasury aims to complete the transaction by the fourth quarter of 2024. Proceeds would help reduce Kenya's public debt, which stands at Sh11.2 trillion ($73 billion). The Treasury has not disclosed specific debt reduction targets.

Why It Matters

This transaction would reshape East Africa's telecommunications landscape. Safaricom reported Sh310 billion ($2 billion) in revenue for the fiscal year ending March 2023. The company contributed Sh124 billion ($807 million) in taxes to the Kenyan government. A Vodacom majority stake could influence technology investments and data management policies. Kenyan businesses rely on Safaricom's infrastructure for digital services. Companies like Twiga Foods, Copia Global, and Sendy use M-Pesa for payments and logistics. Any changes to data governance could affect these operations.

What Businesses Should Watch

Monitor regulatory decisions from the Communications Authority and Competition Authority. Watch for any conditions imposed on data storage and processing. Track Vodacom's investment announcements in Safaricom's network infrastructure. Observe how other telecom operators respond. Airtel Kenya and Telkom Kenya might seek regulatory concessions. Note any shifts in Safaricom's partnership strategies with local fintech firms. Companies should review data processing agreements with Safaricom. Prepare contingency plans for potential changes in service terms or data handling practices.

Market Reactions and Industry Context

The Nairobi Securities Exchange saw increased trading volume in Safaricom shares following the announcement. Safaricom's stock price remained stable at Sh18.50 per share. The company maintains a market capitalization of Sh741 billion ($4.8 billion). Vodacom operates in seven African countries including Tanzania, Mozambique, and the Democratic Republic of Congo. The group serves 186 million customers across its markets. Safaricom represents Vodacom's most profitable subsidiary. Other major telecom transactions in Africa include MTN's expansion in Nigeria and Orange's investments in West Africa. These deals often face scrutiny over foreign ownership limits and data sovereignty concerns.

Potential Outcomes and Next Steps

The National Treasury will proceed with the sale pending regulatory approvals. Vodacom must demonstrate how it will maintain data protection standards. The company might establish a local data governance board. Kenyan authorities could require specific investments in digital infrastructure. The Communications Authority might mandate increased local staff in technical roles. Parliament could hold public consultations on the transaction's implications. The final decision will set a precedent for future foreign investments in Kenya's digital economy. Businesses should engage with industry associations like the Kenya Private Sector Alliance during the review process.