MTN accuses IHS Towers of “wilfully breaching” its agreement as fight for more voting rights intensifies

MTN South Africa says that IHS Towers, a company in which it has a 26 per cent stake, deliberately breached its shareholders’ agreement after it blocked MTN’s bid to increase its voting strength to match its shareholding at the company.

IHS Towers which was founded in Lagos in 2001, describes itself as “one of the largest independent owners, operators and developers of shared communications infrastructure in the world.” Though MTN has a 26 per cent stake in the company, its voting right is capped at 20 per cent. MTN says that a more recent shareholders’ agreement overrides that.

In 2022, IHS Towers bought 5,701 towers from MTN for roughly $350 million. As part of the deal, IHS Towers also provided power management services to MTN SA on approximately 13,000 sites.

But MTN already owns 26% of the company through Mobile Telephone Networks (Netherlands) B.V., one of its subsidiaries. MTN says it owned those stakes long before IHS Towers’ initial public offer (IPO) on the New York Stock Exchange in October 2021.

“MTN has been engaged in discussions with IHS regarding corporate governance matters since prior to its IPO. These discussions included the provisions of the shareholders’ agreement that was in place between IHS and its shareholders prior to the IPO; where an amended shareholders’ agreement was implemented post-IPO, with shareholders who are subject to post-IPO lock-in restrictions,” the telco said.

The MTN vs IHS Towers voting rights debacle

MTN claims that the more recent shareholders’ agreement makes further accommodations for it to be treated equally to other shareholders whose voting rights match their shares in the company.

“The new shareholders’ agreement, amongst other things, addressed the matter of MTN’s desire to be treated equally to other shareholders regarding its voting rights through a priority sale of its non-voting shares,” per a report in the South African publication My Broad Band.

“In view of IHS’ consistent share price underperformance since listing, MTN has not been able to dispose of the non-voting proportion of its shares and remains unable to vote all of its shares,” MTN said.

Read also: IHS towers buys MTN SA’s asset for $412m, now 3rd world largest operator

“Accordingly — in order to effect the aforementioned alignment of economic and voting rights — MTN submitted a governance proposal, prior to IHS’ 2023 AGM, that was to be considered by all shareholders at the AGM.”

MTN says that shareholders are supposed to vote on its initial proposal and include it on the agenda for the IHS’ 2023 AGM, which it said was intended to protect important shareholder rights and better align IHS’ corporate governance with other publicly traded companies.

“Under the shareholders’ agreement and its articles, IHS was required to include the proposal on the agenda for the AGM, notify all other shareholders of the proposal and allow shareholders to vote on the proposal at the AGM,” said MTN

The company said it strongly believes that IHS has willfully breached the shareholders’ agreement and articles by failing to notify its shareholders of the proposal and denying its shareholders the opportunity to vote on it at the AGM.

It also requested the IHS board to call an extraordinary general meeting of the IHS shareholders to consider the proposal, and any other shareholder proposals relating to governance.

According to the IHS Towers website, it has a ten-person board that includes former MTN CEO, Phuthuma Nhleko, former Florida governor and U.S. Presidential candidate for the Republican Party, Jeb Bush, Mallam Bashir Ahmad El-Rufai, a Director and the Chairman of the Board of Directors for IHS Nigeria Limited since 2002, and Sam Darwish, one of the co-founders and the Chairman and Group Chief Executive Officer of IHS Towers.

At the time of reporting MTN said it hasn’t heard back from the IHS board.

“Beyond this, MTN is currently evaluating all its options with the intention of fully enforcing the shareholders’ agreement and articles,” it said.