Mobile operator MTN is accusing tower company IHS of wilfully breaching the shareholders’ agreement and articles over voting powers.
In a media statement today, MTN says it notes recent media reports regarding the IHS annual general meeting (AGM), held on 7 June.
Earlier this month, Bloomberg reported that the IHS annual meeting devolved into a tense standoff over investor power, after the tower operator dismissed demands from two of its largest stakeholders.
It added that Wendel and MTN, which together own about 45% of the company, argued that all shareholders with at least a 10% stake should have the power to nominate board members. However, it reported that the IHS board dismissed the proposals.
MTN, through its subsidiary Mobile Telephone Networks (Netherlands), holds approximately 85.2 million (26%) of IHS shares.
The UK-headquartered IHS Towers is one of the largest telecommunications infrastructure providers in Africa, Latin America and the Middle East by tower count, and the fourth largest independent multinational tower company globally.
In June last year, IHS Towers completed the acquisition of over 5 000 MTN towers in SA, in a deal that saw the New York Stock Exchange-listed tower company fork out R6.4 billion.
IHS Towers now owns 70% of MTN SA’s towers business, with the remaining 30% owned by a B-BBEE consortium.
Under the deal, IHS Towers also provides power management services to MTN SA on approximately 13 000 sites, including the acquisition portfolio.
MTN has held the IHS shares since prior to the IHS initial public offer (IPO) on the New York Stock Exchange in October 2021, with the group’s voting rights being capped at 20%.
According to MTN, it has been engaged in discussions with IHS regarding corporate governance matters since prior to its IPO.
It notes 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 (shareholders’ agreement).
The shareholders’ agreement, among other things, addressed the matter of MTN’s desire to be treated equally to other shareholders when it relates to aligning economic and voting rights, through a priority sale of the group’s proportion of shares that are non-voting, the telco adds.
“In view of IHS’s 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,” says the telco.
“Accordingly – in order to effect the aforementioned alignment of economic and voting rights – MTN submitted a governance proposal, prior to IHS’s 2023 AGM, that was to be considered by all shareholders at the AGM.”
It points out the proposal was intended to protect important shareholder rights and to better align IHS’s corporate governance with other publicly-traded companies.
MTN adds that 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.
“However, MTN strongly believes IHS has wilfully 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.
“MTN has requested the IHS board to call an extraordinary general meeting of the IHS shareholders in order to consider the abovementioned proposal, and any other shareholder proposals relating to governance, to which the group awaits a response. Beyond this, MTN is currently evaluating all its options with the intention of fully enforcing the shareholders’ agreement and articles,” it concludes.