If you needed proof that Safaricom is effectively the sun around which the Kenyan economy orbits, look no further than its latest attempt to borrow money.
On December 9th, the telecommunications giant went to the bond market looking for KES 15 billion. The pitch? A “Green Bond” – specifically, the first tranche of a Medium-Term Note – intended to fund the transition of its massive network infrastructure to renewable energy.
The market response was less “cautious optimism” and more “shut up and take my money.”
Safaricom received applications totalling KES 41.6 billion. That represents an oversubscription rate of 175.7%. Plainly: for every shilling Safaricom asked for, investors offered nearly three.
The “Greenshoe” Option
Because the demand was so overwhelming, Safaricom triggered what is known in finance as a greenshoe option.
What is a Greenshoe Option? Think of this as an “overflow valve” written into the contract. It allows the issuer (Safaricom) to sell more bonds than originally planned if demand is high. It’s a way to capitalise on popularity without having to issue a whole new prospectus.
Safaricom exercised this option to the tune of an additional KES 5 billion. This brings the total amount they are pocketing to KES 20 billion – the absolute maximum they were allowed to take under this tranche’s terms.
However, because they received KES 41.6 billion and can only keep KES 20 billion, they now have the administrative headache of sending money back. Safaricom will be refunding a staggering KES 21.4 billion to investors who missed the cut.
Why the frenzy?
Why are investors tripping over themselves to lend Safaricom money? It comes down to two things: Reliability and Tax.
- The Yield: The bond is a five-year fixed-rate note priced at 10.4%. Interest is paid semi-annually (June and December).
- The Tax Sweetener: This is the killer feature. Returns on this Green Bond are fully tax-exempt. In a high-tax environment, a 10.4% tax-free return effectively beats a significantly higher interest rate on a standard corporate bond where the taxman takes a cut.
CEO Peter Ndegwa noted that the intake reflects confidence in the company’s “balance sheet” and “strategic direction.”
“We made a deliberate decision to diversify our funding sources, and this outcome affirms this choice,” Ndegwa said. Translation: Safaricom doesn’t just want to rely on bank loans; they want direct access to capital markets, and clearly, the markets are happy to oblige.
What is the money actually for?
Safaricom isn’t just hoarding cash; this is specifically a “Green Bond.” This means the funds are legally ring-fenced for environmental projects.
Running a telecom network is incredibly energy-intensive. Thousands of base transmission stations (BTS) cover the country. Many of these, particularly in remote areas, have historically relied on diesel generators, which are expensive to fuel and dirty to run.
The KES 20 billion will go towards:
- Solar Expansion: Retrofitting base stations with solar power to reduce reliance on the national grid and diesel.
- Energy Efficiency: Upgrading cooling systems and power management tech to simply use less electricity.
This is a classic “double bottom line” move. It lowers Safaricom’s carbon footprint (good for PR and the planet) and drastically cuts their operational expenditure (OpEx) on energy (good for the shareholders).
What happens next?
If you managed to get an allocation, the clock starts ticking tomorrow. The notes will be listed and begin trading on the Nairobi Securities Exchange (NSE) on Tuesday, December 16, 2025.
Ndegwa thanked the investors and the Capital Markets Authority, framing the move as a way to “provide a broader range of investment opportunities.” For the investors getting their KES 21.4 billion back, however, the opportunity will have to wait for the next tranche.
