The Treasury’s plan to offload part of its shareholding in Safaricom now depends on Cabinet approval, making it the deciding factor in one of Kenya’s biggest potential privatisation deals.

The government, which holds a 34.9 percent stake in the Nairobi Securities Exchange-listed telco valued at Sh386.9 billion, had earlier disclosed intentions to reduce its shareholding in the current financial year as part of efforts to raise Sh149 billion from privatisation.

However, Treasury Cabinet Secretary John Mbadi told Bloomberg News that the proposed reduction has not yet been agreed upon and would require Cabinet approval before proceeding.

Initially, the State focused on selling shares in Kenya Pipeline Company (KPC), with projections of Sh100 million in returns.

That process has since stalled after the High Court suspended the sale following a petition by the Consumers Federation of Kenya (Cofek), which faulted the lack of transparency, public participation and parliamentary oversight.

Mbadi has previously stated that Safaricom is the only big-ticket enterprise capable of delivering the billions needed in a financial year when the government opted against introducing fresh taxes in the Finance Bill.

“There is talk that if we could offload more of our ownership of Safaricom, we are likely to get the Sh149 billion through privatisation in the 2025/26 financial year,” he said in a recent interview with the Business Daily.

Safaricom’s 2008 initial public offering (IPO), where the government sold a 25 percent stake or 10 billion shares, was oversubscribed by 532 percent and raised Sh51.75 billion.

Analysts expect a similarly high appetite for any new stake sale, given Safaricom’s position as the region’s most profitable company.

Options for the divestiture include a secondary IPO or a direct sale to a high-net-worth investor.

A sale of between five and ten percent at the prevailing share price of Sh27.25 could yield between Sh19.1 billion and Sh38.2 billion.

Analysts favour an off-market deal with private equity firms, which often pay a premium above market prices, to maximise returns for the State.

Beyond Safaricom, the Treasury has also lined up KPC as a candidate for privatisation. Mbadi told Parliament that retaining a minority stake while opening the company to private investors would deliver more value than the current annual dividends of about Sh3 to Sh4 billion.

“Although it is profit-making, the government gets just about Sh3 billion or Sh4 billion annually as dividends. I am sure that if we privatise KPC and just retain a 35 percent stake of ownership, we could make up to four or five times more out of that entity,” he told the Public Debt and Privatisation Committee.

That process now faces uncertainty after the High Court ruling. With most of the 35 State-owned firms earmarked for sale facing financial struggles, only Safaricom and KPC are seen as viable entities to deliver substantial proceeds.

Safaricom’s financial strength underscores its importance in the government’s plans.

The company reported a 7.2 percent rise in net earnings to Sh45.7 billion for the year ended March 2025, buoyed by data and M-Pesa services, including revenue from its Ethiopia operations. It declared a Sh1.20 per share dividend, translating to Sh16.8 billion for the State.

The Privatisation Programme had initially identified 11 firms, among them KPC, Kenyatta International Convention Centre and New KCC, as part of a broader drive to generate revenue for the Exchequer amid rising debt repayments.