IHS Towers, one of Africa’s leading telecommunication infrastructure providers, has come under scrutiny for its refusal to grant MTN Group and Wendel SE greater representation on the board.
MTN Group and Wendel SE, two of IHS’ largest shareholders, submitted a proposal to get better representation on the board during the company’s annual general meeting held on June 7, 2023. However, the proposal was shut down and not even presented for voting.
The investor community is paying close attention and experts say the way this matter unfolds will have significant implications for IHS, its shareholders, and the macro marketplace.
MTN Group owns a 26 per cent stake in IHS, while Wendel SE holds 19 per cent, making them significant stakeholders in the company with a combined 45 per cent. The proposal submitted by MTN and Wendel sought to allow shareholders with up to 10 per cent stakes to nominate board members.
However, IHS board disagreed, claiming that the proposal was not in the best interest of the company. This latest shareholder dispute is not the first involving IHS. Prior to the company’s IPO, IHS management clashed with Wendel over voting rights.
Other key shareholders of the company include; Emerging Capital Partners LLC (11.85 per cent), GIC Pte Ltd. (5.4 per cent), Issam Darwish (3.5 per cent), Goldman Sachs International (1.3 per cent) William S. Saad (0.95 per cent) Goldman Sachs & Co. LLC (0.9 per cent) Mohamad Darwish (0.5 per cent) and Bashir Ahmad El-Rufai (0.3 per cent).
Corporate governance experts say the actions of IHS are concerning and could have significant implications for the company’s governance structure and set wrong precedence for the market.
They posit that effective corporate governance is essential for a company’s success and long-term sustainability. It ensures that there is transparency and accountability, and decisions are made in the best interest of the company and its stakeholders.
IHS is hampering good governance and making it difficult for shareholders to have a say in the company’s management. The proposal submitted by both companies was in line with international best practices, where significant shareholders with a vested interest in a company’s success are given the opportunity to nominate members of the board, an industry watcher said.
The board’s refusal to grant MTN Group and Wendel greater representation on the board raises concerns about its commitment to transparency and accountability. It also raises questions about the company’s management practices and its stewardship of shareholders’ investments.
A source familiar with the situation said, “They’re doing everything but listen to the request of their biggest shareholders. I wonder really what the CEO and Chairman are afraid of. There is a shareholders’ agreement that is clear on these matters; and a proposal has been put forward.
“However this is decided will have strong implications not just for IHS, but for the investor community and the market in general,” the source said. So far, both Wendel and MTN have declined to comment on the situation.
According to the reports, another point of contention was MTN’s motion to convert its non-voting shares into voting shares, which was also denied. The shareholder conflict comes amid a significant drop in IHS’s stock value, which has dropped by 60 per cent since its initial public offering (IPO) in New York in 2021.
According to sources, Wendel and MTN also claimed that IHS management failed to provide timely notice of their proposed resolutions and are now demanding that the general meeting be rescheduled to address their concerns.
Tower companies in Africa are facing significant investment demands to support the continent’s growing use of broadband and smartphones.
