The Court of Appeal has paved the way for the government to proceed with plans to sell part of its shareholding in Safaricom PLC after suspending High Court orders that had frozen the multibillion-shilling transaction pending the determination of a constitutional petition.
In a ruling delivered on Friday, the appellate court held that the government's appeal against the conservatory orders raises substantial legal issues that warrant full consideration, allowing the proposed sale process to continue as the dispute remains before the High Court.
"The Court is satisfied that the intended appeal is arguable and raises serious issues deserving determination," the judges ruled in lifting the injunction that had stalled the transaction.
The decision marks a significant victory for the National Treasury, which has argued that the suspension of the deal was undermining its financing plans and sending negative signals to investors.
The government intends to dispose of its 15 per cent stake in Safaricom in a transaction valued at approximately Sh204.3 billion. If completed, the Treasury's shareholding in the telecommunications giant will reduce from 35 per cent to 20 per cent.
Under the proposed arrangement, Vodacom Group Ltd will purchase the government's shares at Sh34 per share.
The South African telecommunications company is also expected to acquire an additional five per cent stake from Vodafone Group, a move that would increase its ownership in Safaricom to 55 per cent and make it the company's majority shareholder.
In urging the appellate court to overturn the High Court orders, the Attorney General argued that the constitutional petition challenging the transaction had not demonstrated that allowing the sale process to proceed would occasion irreversible harm.
The State further maintained that the transaction had not been concluded and that preserving the injunction was unnecessary while the substantive constitutional questions await determination.
The High Court had halted the sale in May after petitioners challenged the planned disposal of the shares, arguing that the government was seeking to transfer a strategic public asset without complying with constitutional requirements on transparency, public participation and accountability in the management of public resources.
The petitioners also contended that reducing the State's stake in one of Kenya's most valuable listed companies before the constitutional issues were resolved could permanently prejudice the public interest.
Although the Court of Appeal has removed the interim barrier to the transaction, it emphasised that it was not determining the legality of the proposed sale itself.
Those constitutional questions remain pending before the High Court, which will ultimately decide whether the government complied with the law in seeking to dispose of its stake in Safaricom.
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