The Court of Appeal has cleared the way for the government to proceed with plans to sell part of its stake in Safaricom PLC after suspending High Court orders that had temporarily blocked the multibillion-shilling transaction.
In a ruling delivered on Friday, June 26, the appellate court lifted conservatory orders issued by the High Court, allowing the planned sale process to continue while a constitutional petition challenging the transaction remains pending.
In their decision, the judges said the government's appeal presented weighty legal questions that should be fully heard.
"The Court is satisfied that the intended appeal is arguable and raises serious issues deserving determination," the judges ruled as they set aside the injunction that had stalled the sale.
The ruling is a major boost for the National Treasury, which has maintained that the court orders had disrupted its financing strategy and created uncertainty among investors.
The government plans to sell its 15 per cent shareholding in Safaricom in a deal valued at about Ksh204.3 billion. Once the transaction is completed, the State's ownership in the telecommunications firm will fall from 35 per cent to 20 per cent.
Under the proposed agreement, Vodacom Group will acquire the government's shares at Ksh34 per share.
In addition, Vodacom is expected to purchase another five per cent stake from Vodafone Group. The acquisition would raise Vodacom's ownership in Safaricom to 55 per cent, giving it majority control of the company.
While seeking to overturn the High Court orders, the Attorney General argued that those opposing the transaction had failed to demonstrate that allowing the sale process to proceed would cause irreparable harm.
The State also told the appellate court that the transaction had not yet been finalised, insisting there was no justification for maintaining the injunction while the constitutional issues are still awaiting determination before the High Court.
The High Court had halted the proposed sale in May after petitioners challenged the government's decision to dispose of the shares.
They argued that the State was attempting to transfer a strategic public asset without complying with constitutional requirements relating to transparency, public participation and accountability in the management of public resources.
According to the petitioners, reducing the government's stake in one of Kenya's most valuable listed companies before the constitutional questions are resolved could permanently undermine the public interest.
Despite allowing the sale process to proceed, the Court of Appeal stressed that it had not ruled on whether the transaction itself is lawful.
Instead, the judges emphasised that the substantive constitutional questions raised by the petition remain before the High Court, which will determine whether the government complied with all legal and constitutional requirements before seeking to dispose of its stake in Safaricom.
Until then, the transaction can continue, but its ultimate legality will be decided by the High Court.
