MTN South Africa has accused IHS Towers of intentionally violating the shareholders’ agreement by blocking MTN’s attempt to increase its voting power in line with its ownership.
IHS Towers, founded in Lagos, Nigeria in 2001, is known as one of the largest independent operators of shared communications infrastructure globally. Despite MTN’s significant share of 85.2 million which amounts to approximately 26% stake, its voting rights are limited to 20%, a restriction that a newer shareholders’ agreement overrides MTN claims.
In 2022, IHS Towers purchased 5,701 towers from MTN for approximately $350 million and provided power management services to MTN SA for around 13,000 sites. MTN argues that it already owned the 26% stake through one of its subsidiaries, Mobile Telephone Networks (Netherlands) B.V., before IHS Towers’ initial public offering (IPO) on the New York Stock Exchange in October 2021.
MTN states that discussions with IHS regarding corporate governance matters began before the IPO and involved the provisions of the previous shareholders’ agreement. A revised agreement was implemented after the IPO, subjecting shareholders to post-IPO lock-in restrictions. According to the new agreement, MTN claims it should be treated equally to other shareholders in terms of voting rights, considering their shareholdings.
However, MTN asserts that it has been unable to sell its non-voting shares due to IHS’ underperforming share price since listing, thereby impeding its ability to vote with all its shares. To address this misalignment, MTN submitted a governance proposal before IHS’ 2023 Annual General Meeting (AGM) to ensure shareholder rights protection and align IHS’ corporate governance with other publicly traded companies.
MTN alleges that IHS violated the shareholders’ agreement and articles by failing to notify shareholders of the proposal and denying them the opportunity to vote on it at the AGM. It has requested an extraordinary general meeting of IHS shareholders to consider the proposal and other governance-related proposals. The IHS board, which includes individuals like former MTN CEO Phuthuma Nhleko and former Florida governor Jeb Bush, has yet to respond.
MTN has emphasized its intent to enforce the shareholders’ agreement and explore all available options. The company believes IHS Towers has deliberately breached the agreement, prompting MTN to seek a resolution and ensure equitable treatment among shareholders.
