Safaricom shareholders to vote on Vodacom’s right to appoint CEO after takeover

Safaricom shareholders are scheduled to vote later this month on a proposal that would grant Vodafone Kenya, the subsidiary through which Vodacom manages the company, the formal right to nominate Safaricom’s chief executive officer. This move could significantly alter the control of East Africa’s most valuable telecom operator for years to come.

The vote is set to take place during Safaricom’s Annual General Meeting on July 31. The meeting comes just weeks after Vodacom finalised its acquisition of a 15% stake from the Kenyan government on June 30. As a result of this transaction, Vodacom’s effective shareholding increased from 39.9% to 55%. Valued at approximately $1.6 billion, this share acquisition has made Vodacom the majority shareholder in a company that serves tens of millions of customers in both Kenya and Ethiopia.

Under the proposed amendment to Safaricom’s articles of association, the CEO would be appointed from a list of nominees provided by Vodafone Kenya for as long as it holds more than 50% of Safaricom’s issued share capital. For the resolution to pass, 75% of shareholders must vote in favour.

The proposed changes instruct the board to promote “a mainly Kenyan character” in the company’s senior management and executive committee. This clause aims to address worries about foreign control of a company that plays a significant role in Kenya’s identity and economy.

According to the governance structure, both Vodafone Kenya and the Kenyan government have the right to appoint one director for every 10% shareholding. The government must also approve any major brand changes and any expansion beyond Kenya and Ethiopia.

Similar read: Kenya court clears Vodacom’s $1.6 billion Safaricom acquisition

What this means for current CEO Peter Ndegwa and Safaricom’s future

Safaricom’s current CEO is Peter Ndegwa, who has been leading the company since 2020. Under his leadership, Safaricom has experienced significant expansion, including its entry into Ethiopia. This move represents one of the company’s most ambitious growth strategies and introduces one of its most challenging operational environments.

The proposed amendment will likely not affect Ndegwa or the programmes he is currently running. If shareholders approve the changes on July 31, Vodafone Kenya will officially have the right to nominate future CEOs once it owns more than 50% of the company, which it already does. This right will only matter when the current CEO leaves or if there are leadership changes.

The amendment makes official what was previously informal. Vodacom became the majority shareholder when the deal closed on June 30. However, the rules that would give it a proper say over leadership choices were not yet in place. The vote on July 31 addresses this by allowing the majority shareholder to have a formal and documented say in Safaricom’s long-term strategy at the highest level.

That is a meaningful shift for a company of Safaricom’s significance. Safaricom is not just East Africa’s largest telecom; it is the operator of M-Pesa, one of the world’s most successful mobile money platforms, with over 30 million active users in Kenya alone. Who sits in the CEO’s chair and who nominates them has implications that extend well beyond quarterly earnings.

The road to this point was not straightforward. Vodacom’s stake acquisition faced a legal challenge in March when Kenya’s High Court temporarily halted the deal following a petition arguing the sale of a public asset to a foreign entity violated constitutional principles of equity, accountability, and fairness. Kenya’s Court of Appeal overturned that ruling in late June, clearing the path for the acquisition to close and for the governance questions now heading to a shareholder vote to finally be resolved.