Africa’s telecom giant, MTN has accused IHS Towers of wilfully breaching its shareholders’ agreement, blocking a proposal to increase the African telecommunications giant’s voting powers in line with its shareholding.
IHS Towers bought 5,701 towers from MTN in 2022 for R6.4 billion cash.
MTN, in turn, owns 26% of IHS Towers through its subsidiary Mobile Telephone Networks (Netherlands) B.V.
However, MTN’s voting rights are capped at 20%, which appears to be the heart of its dispute with the IHS board.
In a statement issued on Tuesday, MTN explained that it has held IHS shares since before the 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,” the company stated.
“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 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.
“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.
“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 said its proposal 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
“However, MTN strongly believes that 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 said it has 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, its ten-person board includes CEO and chairman Sam Darwish, former MTN CEO Phuthuma Nhleko, and former Florida governor and U.S. Presidential hopeful Jeb Bush.
MTN said it still awaits a response 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 warned.
*Mybroadband.co.za
