Ndindi Nyoro has criticised the potential sale of government shares in Safaricom at a price of Sh34 per share, arguing that the move would significantly undervalue one of Kenya’s most profitable companies.
Nyoro made the remarks amid discussions around the government potentially divesting part of its stake in the telecommunications firm to raise revenue.
Concerns Over Market Timing
According to Nyoro, selling shares during a bearish market could lead to the government receiving less value for its holdings.
He noted that Safaricom shares traded at around Sh45 in 2021, and questioned the rationale for selling them at a lower price.
“The market has been bearish, and therefore it would be wrong for Kenya to sell Safaricom shares at Sh34 a share that was selling at Sh45 in the year 2021,” Nyoro said.
The lawmaker argued that market conditions should be carefully considered before undertaking any large-scale share sale involving a strategic national asset.
Ethiopia Investment Still Maturing
Nyoro also pointed to Safaricom’s expansion into Ethiopia, saying the investment had weighed on the company’s finances over the past two years.
Safaricom launched operations in Ethiopia as part of a consortium that secured one of the country’s first private telecom licences following market liberalisation.
The project has required significant capital investment, and the operation has reportedly been loss-making during its early years as the network infrastructure was built and subscribers were onboarded.
However, Nyoro said the Ethiopian business is now approaching operational break-even, suggesting future financial performance could improve.
Expectations of Higher Profit
The Kiharu Member of Parliament suggested that the company’s earnings could increase significantly in the near future.
“In all considerations, it is possible that Safaricom will be making Sh100 billion on the bottom line from next year,” Nyoro said.
If such projections materialise, he argued, selling shares now could mean the government misses out on higher valuations in the future.
Debate Over Government Divestment
The remarks come as Kenya explores various options to raise revenue and manage fiscal pressures, including potential sales of government stakes in major state-linked companies.
Safaricom remains one of the most valuable companies listed on the Nairobi Securities Exchange and is a major contributor to investor activity on the market.
Analysts say any significant divestment by the government could have a major impact on the stock’s liquidity and pricing, depending on the structure and timing of the sale.
Nyoro argued that the reasoning behind selling shares at the suggested price reflects poor decision-making.
“The kind of price and reason given reflects incompetence and ineptitude in itself,” he said.
