National Treasury Cabinet Secretary John Mbadi dismissed Kiharu MP Ndindi Nyoro’s claims that the government is underpricing its 15 percent stake in Safaricom PLC.
Addressing the media on Thursday, December 4, Nyoro said Safaricom’s shares were selling at Ksh45 in 2021 before Safaricom invested in Ethiopia.
“The government of Kenya is proposing to sell 15 percent stake in Safaricom PLC at Ksh34. Kenyans need to know that Safaricom shares were trading at an average of Ksh45 in 2021, valuing Safaricom PLC at Ksh1.8 trillion. That was before Safaricom even invested in Ethiopia,” said Nyoro.
The Kiharu MP argued that the government cannot sell shares while valuing Safaricom at less than Ksh2.5 trillion.
"There is no way the government can purport to sell Safaricom at less than Ksh2.5 trillion other than if there is self-interest or incompetence. The government has sided with the buyers and is going on a major loss," he stated.
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In a response on Friday, December 5, CS Mbadi said the valuation of Safaricom as an entity is different from the value of shares.
The Treasury CS acknowledged that Safaricom's entity value could be Ksh 2.5 trillion but noted that the telecommunication company’s shares are sold at the market value.
“If Ndindi is an economist, he should know that the value of the shares is not equal to the value of the firm. I saw some write-up that he is talking about the value of Safaricom as of today could be Ksh2.5 trillion, fine, it could be that, but we are not selling as an entity, we are offloading shares,” said Mbadi.
He also mentioned that the government got the average price of Safaricom shares in the last months before settling on Ksh34 per share.
“The shares can only be sold at the market price. What we did was to get the average price of shares for the last six months and got the average and there is a premium on top of that. Can he dispute that?” the Treasury CS posed.
At the same time, CS Mbadi said there will be no staff redundancy in Safaricom after the 15 percent stake sale is completed.
He mentioned that the CEO, Chairperson and majority of independent board members will remain Kenyans
“We have come up with an agreement which has safeguarded the interests of Kenyans. There will be no staff redundancy, the management and management structure in terms of governance of the company still remains, the CEO and Chairman will be Kenyan, and the majority of independent board members will be Kenyan citizens,” Mbadi added.
Safaricom on Thursday announced that it has received a notice of intention by Vodafone Kenya to acquire an additional 6,009,814,200 ordinary shares representing 15 percent from the Kenyan government.
The company noted that the Kenyan government will sell the shares at a cost of Ksh34.00 per share, totaling to Ksh204.3 billion ($1.6 billion).
The government will also receive an upfront payment of Ksh40.2 billion in lieu of future dividends valuing the transaction at Ksh244.5 billion.
Vodafone, which currently has a 39.9 percent stake in Safaricom, will become the largest shareholder, holding a 55 percent stake.
The Kenyan government and general public investors will, on the other hand, retain a 20percent and 25 percent stake respectively.
