South African telecommunications group Vodacom said it will appeal a Kenyan High Court ruling that invalidated its $1.9 billion purchase of a stake in Safaricom, putting the ownership of Kenya’s largest mobile operator under fresh legal uncertainty.

The court ordered that a 15% stake in Safaricom be returned to the Kenyan government, saying the sale breached public-finance laws and did not meet requirements for public participation. Judges Francis Gikonyo, Roselyne Aburili and Tabitha Ouya issued the ruling Tuesday in Nairobi.

“Vodacom will lodge an appeal against today’s decision with the Court of Appeal and will also apply for a stay pending the determination of the appeal,” the company said in a statement.

Court challenges Safaricom share sale

Vodacom shares fell almost 4% in Johannesburg, the biggest intraday decline since July 27, before recovering some of the losses. Safaricom shares rose as much as 2.2% in Nairobi.

The judges said the divestiture was carried out in violation of Kenya’s constitution and other laws and declared the transaction “invalid, null and void.” They ordered that the 15% stake be restored to the government.

The court also criticized the disclosure of key transaction documents, including the share-purchase agreement and a separate agreement covering dividend rights. It said the government had not adequately explained why Vodacom was selected without a competitive process.

The judges further ruled that the upfront monetization of future dividends and the transfer of effective control of a strategic national asset raised constitutional and national-security concerns.

“The divestiture involved the acquisition of effective control,” the ruling said. “It was a takeover.”

If Vodacom loses its appeal, the Kenyan government could face pressure to return about $1.9 billion it has already received from the transaction.

Vodacom says deal was legally completed

Vodacom agreed in December to acquire an additional stake in Safaricom, raising its ownership to about 55% from almost 40%. The Kenyan Treasury’s stake fell to about 20%.

The South African company agreed to pay Ksh34 ($0.26) per share for 8.01 billion shares, valuing the transaction at about R34.52 billion ($1.9 billion) at the time.

The court said the parties had not sought an exemption from takeover requirements and found no evidence that the Competition Authority of Kenya had approved the transaction. It also questioned the appointment of KCB Investment Bank as transaction adviser.

Vodacom said the deal was completed June 30 after the Court of Appeal lifted a conservatory order and all conditions required to close the transaction had been met.

The sale generated about Ksh204.3 billion ($1.6 billion), with another Ksh40.2 billion ($310.2 million) raised through the securitization of future dividends.

The transaction is part of President William Ruto’s administration’s broader effort to sell state assets and raise money for infrastructure projects. The government has outlined a $39 billion pipeline covering railways, airport upgrades, roads, power infrastructure, dams and irrigation.

Safaricom remains central to Vodacom

Vodacom, majority-owned by Vodafone Group, operates mobile, data and financial-services businesses across several African markets. The company says its services reach more than 230 million customers.

Safaricom, founded in 1997 and based in Nairobi, is Kenya’s largest telecommunications company. Its businesses include mobile voice and data, fixed connectivity, fiber, cloud services and financial technology, with M-Pesa serving as its largest business.