NAIROBI – Safaricom PLC (NSE: SCOM) on Tuesday, November 25, 2025, officially launched a landmark Sh15 billion, five-year green bond, offering investors a 10.4% tax-free interest rate. This issuance is the first tranche of a larger Sh40 billion Medium-Term Note (MTN) programme approved by the Capital Markets Authority (CMA) on November 7, 2025. The offer, which runs until 5:00 PM EAT on Friday, December 5, 2025, is poised to reinvigorate Kenya's corporate bond market and channel significant capital into sustainable infrastructure.

The bond, which requires a minimum investment of Sh50,000, comes with a greenshoe option to accept an additional Sh5 billion, potentially raising the total to Sh20 billion if oversubscribed. Proceeds are earmarked exclusively for financing and refinancing eligible green projects as outlined in the company's Sustainable Finance Framework. Key initiatives include transitioning thousands of network sites to solar power, expanding 4G and 5G infrastructure, and investing in green buildings and energy-efficient technologies in both Kenya and Ethiopia.

Strategic Shift to Local, Sustainable Financing

This move marks a significant strategic pivot for Safaricom, diversifying its funding sources and mitigating foreign exchange risks that have previously impacted its earnings. By issuing a Kenyan shilling-denominated bond, the company aligns its liabilities with its primary revenue currency, a lesson learned after repaying a $400 million dollar-denominated loan for its Ethiopia expansion in November 2023. The bond provides stable, long-term capital required for substantial network investments while preserving operating cash flow.

The tax-exempt status of the green bond makes it a particularly attractive proposition for investors. The 10.4% coupon rate is equivalent to a pre-tax yield of 12.35% for investors subject to the standard 15% withholding tax on corporate bond interest. This positions it favorably against other recent corporate debt, such as East African Breweries Limited's (EABL) taxable 11.8% bond, which was oversubscribed, signaling robust investor appetite for well-structured corporate paper.

"This Green Bond underscores our commitment to embedding sustainability at the heart of our business," said Peter Ndegwa, CEO of Safaricom, in a statement on November 25, 2025. Dilip Pal, Safaricom's Group Chief Finance Officer, added that the issuance marks a major milestone in the company's financing plans, enabling it to tap into the local debt capital market.

Fueling Expansion in Kenya and Ethiopia

A significant portion of the funds will fuel Safaricom's ambitious expansion and network densification plans. In Kenya, the focus is on scaling 4G and 5G services to meet surging data demand. In Ethiopia, the capital injection is critical for sustaining momentum in one of Africa's most promising telecom markets. Safaricom Ethiopia has already invested over 300 billion ETB (approximately $2.5 billion) since its 2022 launch, achieving 55% population coverage and attracting 10 million active customers as of July 2025.

The company aims to nearly double its network sites in Ethiopia to over 6,000 by December 2026 and is targeting financial break-even within the next 6 to 12 months. This bond provides crucial funding to support this expansion from operating costs to capital expenditure.

Market Impact and Investor Confidence

Analysts anticipate strong demand for the bond, citing Safaricom's low-risk credit profile, large customer base, and the growing local and global appetite for ESG-linked investments. The issuance is seen as a major boost for the Nairobi Securities Exchange (NSE), which has seen limited corporate bond activity in recent years. The successful EABL bond and now Safaricom's larger green offering are expected to revitalize the market, providing a new avenue for companies to raise capital and for investors to diversify their portfolios.

The bond's structure and governance are guided by Safaricom's Sustainable Finance Framework, which has been independently reviewed by Sustainalytics to ensure alignment with international standards like the ICMA Green Bond Principles. This provides investors with transparency and assurance regarding the environmental impact of their investment.

The transaction is being managed by a consortium of financial institutions, with SBG Securities Limited and Stanbic Bank Kenya Limited as the joint lead arrangers. Dyer & Blair Investment Bank joins them as a placing agent. The notes are scheduled to be listed and begin trading on the NSE on December 16, 2025.