Know anyone offering more the Sh34 for Safaricom? Bring them on!

By MUNGAI KIHANYA

The Sunday Nation

Nairobi,

21 December 2025

I have always insisted that the price of something is what the buyer is willing to pay. You may use sophisticated economic, scientific or mathematical methodologies to come up with a figure, but if there is no buyer willing to pay that much, then the quoted price is wrong. So, this is my take on the debate regarding the government’s plan to sell Safaricom at Sh34 per share: Those who are claiming that this is too low should simply bring a buyer willing to pay higher!

On the day the announcement was made (4th December 2025), Safaricom shares were trading at Sh29 so the government had negotiated a premium of about 17 per cent above the prevailing market price. The question that hasn’t been asked is this: why would anyone be willing to pay Sh34 while the shares are trading Sh29?

The reason is that if they did that, the share price would shoot up rapidly, probably to almost Sh100 due to the increased demand. Approximately 7 million shares of Safaricom are traded daily at the Nairobi Securities Exchange; therefore, a demand for 6 billion shares is equivalent to about 1,000 trading days – about 4 years’ worth! Something like that happened in 1997 when Guiness PLC increased its stake in Kenya Breweries Ltd from 25 to 46 per cent by buying off the open market. The price shot up by more than 300pc in a few months.

All said and done, is Sh34 a good deal? Let’s first compare it to the Initial Public Offer (IPO) price of Sh5 in 2008 (17 years ago). The present offer is about 7 times that of the IPO; this is represents an annual average growth rate of 12 per cent.

In 2008, Safaricom’s net profit was Sh17 billion which worked down to about Sh0.4 per share. Thus, the Sh5 IPO price was about 12.5 times the annual earnings. This year, the company made Sh70 billion which is Sh1.74 per share. Therefore, the Sh34 offer is about 19.5 times the current profits.

Finally, in 2008, Safaricom’s net worth was about Sh43B, or just over one shilling per share; meaning that the IPO price was five times the book value per share. Today, the net worth is Sh224B, or Sh5.60 per share. So, the Sh34 offered is about 6 times the book value.

With these numbers in mind, anyone is now free to decide whether Sh34 is a good or a bad price. I will not state my opinion!