1️⃣ Market Performance

During the week, the equities market trended downwards across all major indices:

• NSE 20: ▼ 2.8%
• NSE 25: ▼ 1.0%
• NASI: ▼ 0.8%
• NSE 10: ▼ 0.7%

This brings the year-to-date (YTD) performance to:

• NSE 20: ▲ 44.8%
• NASI: ▲ 43.3%
• NSE 10: ▲ 38.3%
• NSE 25: ▲ 38.0%

Market weakness was mainly driven by sell-offs in key large-cap counters including:

• NCBA: ▼ 7.8%
• KCB: ▼ 4.3%
• Equity Group: ▼ 2.8%

However, the downturn was partially cushioned by gains in:

• Stanbic: ▲ 7.1%
• EABL: ▲ 1.6%
• Absa: ▲ 0.9%

2️⃣ Market Activity & Foreign Participation

• Weekly turnover: ▼ 17.1% to USD 20.2 million, from USD 24.4 million
• YTD turnover: USD 1.0018 billion

Foreign investors maintained their selling momentum:

• Net foreign position: USD 3.2 million net outflow
• This marks the 9th consecutive week of net selling
• YTD net outflow: USD 96.2 million, up from USD 93.0 million the previous week

Persistent foreign selling indicates cautious sentiment driven by:

• Global risk-off positioning
• Kenya-specific macro risks
• Shilling volatility
• Regulatory and structural concerns

3️⃣ Weekly Highlights

📌 Proposed Acquisition: Vodafone Kenya to Buy 15% of Government’s Safaricom Stake

During the week, Safaricom announced it had received formal notice from Vodafone Kenya Limited expressing intent to acquire 15.0% of the Government of Kenya’s stake, amounting to:

• 6.009 billion shares
• At Kshs 34.00 per share
• Deal value: Kshs 204.3 billion

For context, Safaricom’s market price on 4 December 2025 was Kshs 29.45, implying a 15.4% premium.

This would mark the second major state divestment after the 2008 IPO where the GOK sold 10 billion shares at Kshs 5.00.

Key Transaction Takeaways

📍 1. Post-Transaction Shareholding Structure

Before:

• Vodafone Kenya: 39.9%
• Government of Kenya: 35.0%
• Public & others: 25.1%

After the transaction and internal restructuring:

• Vodafone Kenya: 54.9% (22.0 bn shares)
• Government of Kenya: 20.0%
• Public investors: 25.1%

This effectively makes Vodafone Kenya the controlling shareholder.

📍 2. Internal Reorganisation by Vodacom Group

Vodacom Group (majority owner of Vodafone Kenya at 87.5%) will acquire the remaining 12.5% from Vodafone International Holdings B.V.

This automatically increases its indirect stake in Safaricom by 4.99%, consolidating full control of Vodafone Kenya.

📍 3. GOK’s Receipts from the Transaction

Government will earn:

• Kshs 204.3 bn from the share sale
• Kshs 40.2 bn from selling rights to future dividends on its remaining 20% stake
• Total proceeds: Kshs 244.5 bn

For comparison:
Safaricom paid the GOK Kshs 16.8 bn in dividends in FY’2025.

📍 4. Regulatory Implications

Because Vodafone Kenya will gain effective control, the deal triggers provisions under the Capital Markets (Take-overs & Mergers) Regulations, 2002, which usually necessitate a mandatory takeover offer.

However:

• Vodafone Kenya has stated it does not intend to launch a full takeover bid
• They will seek an exemption from the CMA

📍 5. Approvals Required

The transaction is subject to a multi-agency approval process involving:

• Cabinet approval
• National Assembly
• Capital Markets Authority (CMA)
• Communication Authority of Kenya
• Central Bank of Kenya
• COMESA Competition Commission
• East African Community Competition Authority

Given Safaricom’s strategic position in Kenya’s economy, this process is expected to be thorough and potentially lengthy.

4️⃣ Overall Market View

The equities market faced broad-based weakness driven by bank-sector sell-offs and continued foreign exits. The Safaricom–Vodafone transaction is likely to dominate investor sentiment in the coming weeks, with potential implications for:

• Market liquidity
• Price discovery
• Governance structure
• Regulatory precedent
• Foreign investor appetite

If approved, the transaction may be seen as a vote of confidence in Safaricom’s fundamentals, though near-term volatility is possible due to positioning adjustments.

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