IHS Towers has hit back at MTN’s claim that the Nigeria-based tower operator is blocking its bid to have a greater say in how the business is run, saying a proposal drawn up by the mobile operator isn’t in its best interests.
It has also rejected a call by Africa's largest mobile operator to convene an emergency meeting of shareholders, saying the company doesn’t have the authority to do so.
MTN, one of IHS’s largest shareholders, has been at odds with the tower company’s management for some time. Earlier this week the Johannesburg-based firm issued a strongly worded statement, calling out “governance concerns at IHS”.
In essence, MTN wants to have a greater say about IHS’s activities. It drafted a proposal to align its 26% equity stake and voting rights — capped at 20% — that failed to be put to a vote at IHS’s AGM. MTN accuses IHS management of intentionally holding back on notifying other shareholders about the proposal.
In a statement sent to Business Day, IHS said its board had “unanimously determined that the recent shareholder proposal requested by MTN was not in the best interests of IHS Towers as a whole or our collective shareholder base and, in accordance with our articles and shareholder agreement, declined the request to submit the proposal to shareholders at our AGM.”
MTN’s voting rights have been capped at 20% since 2014 as per an agreement with the mobile operator “to preserve IHS Towers’ independence and account for the fact that MTN is IHS Towers’ largest customer”.
MTN has sold and is leasing back its network towers in its various market. Many of these are owned and operated by IHS. The tower company entered the SA market in 2022 after completing a R6.2bn sale-and-leaseback deal of MTN’s 5,700 towers in the country.
In October 2021, IHS listed on the New York Stock Exchange. At the time, MTN owned about a third of the company and was thought to be in line for bumper payday by selling down the investment.
By June 2021, the group estimated the value of that 29% equity at R30.5bn. Selling down the stake, plus other moves such as repatriation of funds from Nigeria, were billed as ways to eliminate MTN’s debt.
However, market conditions have seen IHS lose half its value since listing. Having debuted at $16.69 a share, it now trades at $8.59. And even with a weaker rand, MTN’s stake in IHS, now at 26%, is worth about R14bn.
Similar market conditions scuppered Telkom’s efforts to list its tower business, Swiftnet, on the JSE a few months later, in early 2022. Telkom had valued the unit at R13bn but failed to get even three-quarters of that when testing the market.
Because of the underperforming share price, MTN says it has not been able to dispose of the non-voting portion of its shares in IHS and remains unable to vote all of its shares.
MTN has called for an emergency meeting of IHS investors, but has been rebuffed.
“MTN does not have the right to call an extraordinary general meeting under our articles or shareholder agreement,” IHS said in statement. “IHS Towers remains focused on increasing shareholder value and will continue to engage with MTN as we do with all our shareholders.”
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.