The government’s proposal to sell its 15 percent stake in Safaricom to Vodacom has ignited a heated political and economic debate, pitting fiscal strategy against populist rhetoric.

At the centre of the storm is Kiharu MP Ndindi Nyoro, who has accused the State of undervaluing one of Kenya’s most prized corporate assets.

Mr Nyoro has argued that the government is “giving away” Safaricom, pointing to the company’s 2021 peak share price of Sh41 as evidence that the proposed transaction short-changes taxpayers.

The claim has resonated in political circles, where Safaricom is often viewed as a symbol of national economic success.

However, the argument oversimplifies a complex valuation exercise and ignores both current market realities and Safaricom’s evolving business structure.

Valuation is grounded in present fundamentals, not historical highs achieved under very different market conditions.

Also Read: CS Mbadi Clarifies on Government Selling Safaricom Shares

Market Reality Versus Political Rhetoric

Safaricom currently trades at about Ksh29.45 per share, reflecting broader market conditions, regulatory pressures, and maturing growth in traditional telecom services.

Using past peak prices as a benchmark amounts to nostalgia-driven valuation rather than sound financial analysis.

Safaricom today is not just a telecom operator but a diversified enterprise spanning telecommunications, fintech, and emerging digital services.

Because of this complexity, Sum-of-the-Parts (SOTP) is the favoured valuation method, which assesses each business unit independently based on growth prospects and risk.

Breaking Down Safaricom’s True Value

The company’s core telecom segment, covering voice, data, SMS, broadband, and enterprise connectivity, remains its backbone.

Telecom firms are typically valued using EV/EBITDA multiples due to heavy capital investment requirements.

Applying Safaricom’s EV/EBITDA multiple of about 7.07x to its 2024 EBITDA of Sh186.2 billion yields an estimated value of roughly Sh790 billion for this segment.

M-Pesa and other fintech services form the second pillar.

With revenues of around Ksh161 billion, this segment attracts higher valuation multiples because of scalability and growth potential.

Using a conservative EV/Revenue multiple of 2.5x places M-Pesa’s valuation at approximately Ksh400 billion.

The third segment, enterprise solutions, fibre, cloud computing, Internet of Things, and other digital ventures, though smaller, represents Safaricom’s future growth frontier.

Assigning 15 percent of EBITDA to this unit and applying a 6x multiple results in a valuation of about Sh170 billion.

Combined, these figures produce an SOTP valuation of around Sh1.36 trillion, translating to roughly Sh34 per share.

Also Read: Safaricom’s Green Bond Raises Ksh41 Billion

Strategic Rationale and Government Defence

Against this backdrop, the government’s asking price of Ksh245 billion for a 15 percent stake implies a total valuation of about Sh1.63 trillion, above both the SOTP estimate and current market capitalisation.

Treasury Cabinet Secretary John Mbadi has defended the move, saying the sale is designed to unlock capital for long-term infrastructure investment, not to plug budget deficits.

Mbadi argues that Kenya’s growth constraints, poor roads, costly energy, outdated airports, and reliance on rain-fed agriculture require innovative, non-debt financing.

Proceeds from the Safaricom sale are earmarked for a National Infrastructure Fund to crowd in private capital while preserving intergenerational wealth.

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Kiharu MP Ndindi Nyoro in a past address. PHOTO|COURTESY