Kenya’s largest telecoms operator, Safaricom, is facing renewed scrutiny after industry players warned that the government’s planned sale of its remaining stake could entrench the company’s market dominance and weaken regulatory oversight.
The Technology Service Providers of Kenya (TESPOK), an industry association representing more than 130 firms in the country’s technology ecosystem, said on Tuesday that Safaricom’s ownership restructuring must not undermine competition in the telecoms market.
In a statement issued on January 14, TESPOK urged lawmakers and regulators to put in place a post-divestiture framework to safeguard fair competition, including transparent spectrum allocation and equitable interconnection rates.
“With regard to market competition and regulation to prevent dominance, the process must not reduce regulatory oversight or entrench Safaricom’s market dominance,” the association said.
TESPOK said it had proposed discussions with the National Assembly and the Communications Authority of Kenya (CA) to address potential competition risks arising from the transaction.
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The concerns follow Safaricom’s confirmation on December 4, 2025, that Vodafone Kenya Limited had agreed to acquire the government’s 15% stake in the company for 244.5 billion Kenyan shillings (about $1.9 billion).
Under the deal, Vodafone plans to buy 6.01 billion ordinary shares held by the state at 34 shillings per share, representing a 21% premium to Safaricom’s closing share price of 28.20 shillings at the time of the announcement.
If completed, the transaction would make Vodafone the dominant shareholder in Safaricom, which already controls the majority of Kenya’s mobile voice, data and mobile money markets through its flagship M-Pesa platform.
Calls for safeguards and transparency
TESPOK said the government should publish the valuation report used to determine the sale price and clearly explain why it opted for a direct sale rather than a competitive bidding process.
“To ensure transparency and fair market value, the valuation report and the rationale for the disposal method should be made public,” the association said.
It also raised national security and data sovereignty concerns, recommending that the deal include safeguards such as “golden share” provisions or limits on foreign ownership to protect critical digital infrastructure.
To avoid market disruption, TESPOK proposed that the divestiture be carried out in a predictable and phased manner, warning that abrupt changes could unsettle investors and the broader technology sector.
Political scrutiny intensifies
The transaction has triggered intense debate in parliament. Appearing before a joint sitting of parliamentary committees on January 13, Treasury Cabinet Secretary John Mbadi defended the decision to allow Vodafone to be the sole buyer of the government’s stake.
Lawmakers questioned why the shares were not sold through an open bidding process and raised concerns about public participation, minority shareholder protection, data security, staff welfare and foreign exchange risks.
Some legislators also challenged the decision to sell the full 15% stake, arguing that offloading a smaller portion could have raised funds without ceding control to a single foreign investor.
Mbadi told lawmakers that the government expects to spend more than 3 billion shillings (about $23 million) on transaction advisers and legal fees linked to the sale.
He insisted that the proceeds would not be used to plug budget deficits or finance recurrent spending. Instead, he said, the funds would serve as seed capital for a planned National Investment Fund (NIF) aimed at supporting long-term development projects.
“The money is not for budgetary support,” Mbadi said. “It will be ring-fenced exclusively for the establishment of the National Investment Fund.”
A dominant player under the spotlight
Safaricom has long been criticised by rivals for its outsized influence in Kenya’s telecoms sector. The company accounts for more than half of mobile subscribers and an even larger share of mobile money transactions, giving it significant pricing and bargaining power.
Regulators have previously imposed remedies, including infrastructure sharing and mobile termination rate controls, to curb potential abuse of dominance.
Analysts say the proposed share sale has heightened sensitivities around competition policy at a time when Kenya is pushing to expand digital services and attract foreign investment.
“The structure of this deal matters,” said one Nairobi-based telecoms analyst. “If not carefully managed, it could reinforce an already dominant position in ways that are difficult to unwind.”
As parliamentary scrutiny continues, the Safaricom transaction is shaping up as a key test of Kenya’s ability to balance privatisation, foreign investment and competition in one of its most strategic sectors.
