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MTN group CEO Ralph Mupita. Picture: FREDDY MAVUNDA
MTN group CEO Ralph Mupita. Picture: FREDDY MAVUNDA

MTN is prepared to take IHS to court to have its governance concerns about Africa’s largest cellphone tower provider addressed, CEO Ralph Mupita says. 

“We do feel very aggrieved that the IHS board has refused [to comply with its obligation to force a vote over governance proposals] and … all options are on the table,” Mupita told investors as the group reported interim earnings this week. 

“We will engage other IHS shareholders and if we need to litigate with IHS, we will step into that ring. The governance issues for us are super important and we are not going to back down on this.”

Last month, IHS’ second-largest shareholder, Wendel, filed a case with the Grand Court of the Cayman Islands that seeks to force a vote at IHS Towers regarding governance proposals after the board failed to put it forward at its June shareholders meeting. 

The case is the latest in a series of events that has caused IHS, cofounded in 2001 by current CEO Sam Darwish, to be at odds with its investors over governance issues.

MTN and French investment group Wendel have voiced concerns about alleged governance issues at Africa’s largest cellphone tower business.

MTN penned a strongly worded statement calling out “governance concerns” at IHS in June.

Primary concern

The mobile operator wants to have a greater say in IHS’ activities. It drafted a proposal to align its 26% equity stake and voting rights — capped at 20% — that IHS failed to put to a vote at its AGM.

“There’s a long history to this. When we went towards listing IHS, we did raise this to say this was a problem for us in the near term. The cure for it was that these were the first shares to have been sold in a sell-down process, which had been anticipated. But it was our number one concern, ahead of the valuation,” said Mupita. 

IHS, now valued at $2.32bn, has lost almost 60% of its value since listing on the New York Stock Exchange in October 2021. 

“We will engage other shareholders, and litigation is absolutely an option that [we] will take against IHS,” said the MTN boss. 

Wendel and MTN, which together own about 45% of the company, argue that all shareholders with at least a 10% stake should have the power to nominate board members. 

According to people familiar with the matter, Darwish believes that if the MTN and Wendel resolutions are passed by shareholders, MTN could be well placed to take over control of the company in a hostile takeover.

Approached board

A hostile takeover refers to a corporate acquisition that is not supported by the target company’s management. In it, the acquiring company makes an offer to purchase the target company’s shares directly from the shareholders, bypassing the target company’s board of directors.

Business Day also understands that MTN took its fight to IHS’ board after failing to get results with Darwish and the management team. The fight became public after the tower company refused to put MTN and Wendel’s resolutions to a shareholder vote. 

IHS’ board comprises luminaries that include Darwish himself; former US governor for the state of Florida Jeb Bush; as well as businessman Phutuma Nhleko, who many regard as being the architect of MTN’s rapid expansion through Africa and the Middle East, having previously served as the operator’s CEO and chair.

Brazilian investment banker Maria Carolina Lacerda; former executive chair of audit firm EY Nick Land; former Xerox Corporation chair Ursula Burns; Frank Dangeard, who has served on the boards of Orange and Eutelsat; venture capitalist Aniko Szigetvari; and Mallam Bashir Ahmad El-Rufai, co‑founder and president of Nigeria’s first indigenous private telecom operator, Intercellular, round up the nine person governing body. 

“We also believe that IHS’ current position of refusing to comply with its obligations and allow shareholders to vote on these proposals is having a significant negative effect on IHS’ share price,” said the group. 

MTN has since decided to hold on to its stake “for the medium term”, which indicates at least another three years. 

When IHS made its stock market debut MTN owned about a third of the company and was thought to be on a path to a bumper payday, when it would eventually sell down the investment.

MTN has IHS listed in its books at a fair value of R15.667m, compared with R14.470 in June 2022. Just before listing, MTN had its IHS stake listed at about R30bn. The fair value calculation is determined by reference to published price quotations on the New York Stock Exchange.

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