MTN South Africa has alleged that IHS Towers, a company in which it holds a 26% stake, deliberately violated their shareholders’ agreement. This they did by blocking MTN’s attempt to increase its voting rights to match its shareholding in the company.
IHS Towers, was founded in Lagos in 2001. It is described as one of the largest independent owners, operators, and developers of shared communications infrastructure globally.
While MTN has a 26% stake in the company, its voting rights are limited to 20%. MTN argues that a more recent shareholders’ agreement overrides this restriction.
The backstory to MTN South Africa and IHS Towers
In 2022, IHS Towers acquired 5,701 towers from MTN for approximately $350 million. As part of the deal, IHS Towers also provided power management services to MTN SA for around 13,000 sites.
However, MTN asserts that it already owned a 26% stake in IHS Towers through its subsidiary, Mobile Telephone Networks (Netherlands) B.V. This is prior to the company’s initial public offering (IPO) on the New York Stock Exchange in October 2021.
“MTN has been in discussions with IHS regarding corporate governance matters since before its IPO. These discussions included the provisions of the shareholders’ agreement in place between IHS and its shareholders before the IPO, which was subsequently amended after the IPO with shareholders subject to post-IPO lock-in restrictions,” stated MTN.
MTN claims that the revised shareholders’ agreement allows for equal treatment, granting it voting rights commensurate with its shareholding, similar to other shareholders.
“The new shareholders’ agreement, among other things, addressed MTN’s desire for equal treatment in terms of voting rights through a priority sale of its non-voting shares,” reported South African publication My Broad Band.
However, due to IHS Towers’ consistent underperformance in share price since the IPO, MTN has been unable to sell its non-voting shares and remains unable to exercise voting rights for all its shares.
“To achieve alignment of economic and voting rights, MTN submitted a governance proposal before IHS’ 2023 AGM, which was intended to be considered by all shareholders at the AGM,” said MTN.
MTN insists that the proposal should have been included on the agenda for the IHS’ 2023 AGM and brought to a shareholder vote, in accordance with the shareholders’ agreement and its articles.
MTN accuses IHS of willfully breaching the shareholders’ agreement and articles by failing to notify its shareholders of the proposal and denying them the opportunity to vote on it at the AGM. MTN has requested the IHS board to convene an extraordinary general meeting of IHS shareholders to discuss the proposal and any other governance-related proposals.
According to the IHS Towers website, the company has a ten-person board that includes former MTN CEO PhuthumaNhleko, former Florida governor and U.S. Presidential candidate Jeb Bush, Mallam Bashir Ahmad El-Rufai, Director and Chairman of the Board of Directors for IHS Nigeria Limited since 2002, and Sam Darwish, co-founder, Chairman, and Group CEO of IHS Towers.
As of now, MTN has not received a response from the IHS board.
“MTN is currently evaluating all available options to fully enforce the shareholders’ agreement and articles,” it stated.
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