A Kenyan court ruling that overturned the government's sale of a 15% stake in Safaricom to Vodacom has created complications in the company's loan agreements, prompting it to seek waivers from its lenders.

In its financial report for the six months ending September 30, 2026, Vodacom disclosed that the court's decision, handed down on September 15, came shortly after the sale was finalised. The ruling activated default clauses in some of Vodacom's loan agreements — provisions, common in acquisition financing, that can trigger early repayment demands from lenders when certain events occur, such as legal issues affecting other lenders.

While Vodacom has not missed any loan payments, the judgment increased the risk that some lenders might demand repayment sooner than expected. Because the company could not guarantee that repayment could be deferred for another year, it reclassified around $141 million of its long-term debt as short-term debt — an accounting move that signals to users of the financial statements that these amounts could fall due within the coming year rather than over several years.

The court decision also affected funds that Vodacom was due to receive from Safaricom. Approximately $73 million in dividends was stuck in a special account and could not be withdrawn because of an agreement with Stanbic Bank Kenya tied to an earlier loan default.

Vodacom has since secured waivers from the lenders affected by the court ruling, meaning they will take no action over the defaults arising from the situation. Waivers of this kind leave the underlying events on record but commit the lenders not to enforce their rights over them.

The dispute surrounding Vodacom's recent acquisition of Safaricom has also driven a significant increase in the company's debt. Over the past year, net debt jumped by approximately $4.8 billion to a total of $8.3 billion, driven partly by funds borrowed to purchase Safaricom and partly by the assumption of some of Safaricom's existing debt. As a result, the company's financial leverage has increased, with its net debt-to-EBITDA ratio rising from 0.9 to 1.6 — a shift that leaves Vodacom carrying more debt relative to its earnings and has raised concerns about its financial stability. Net debt-to-EBITDA is a measure lenders and investors commonly use to judge how comfortably a company's earnings cover its borrowings.

Ownership of Safaricom remains contested. A recent High Court ruling could potentially reduce Vodacom's stake in the company from 55% to around 40%, risking its control over the Kenyan telecommunications giant. In the meantime, Kenya's Court of Appeal has instructed that the current shareholding structure remain in place while the case is reviewed — an interim arrangement that keeps Vodacom's majority position intact for now. Vodacom expects a court hearing to take place before the end of December, the next procedural milestone in the dispute, and the Kenyan government, along with Vodafone Group and Vodafone Kenya, is also contesting the ruling.

Despite the legal challenges, Vodacom CEO Shameel Joosub expressed confidence in the acquisition, emphasising the strategic reasons behind the company's decision to invest in Safaricom.

Reference: TechCentral — Vodacom Safaricom ruling: loan defaults, waivers