Following months of wrangling with its shareholders, IHS Towers is a step closer to resolving its corporate woes. Wendel has been a significant shareholder in IHS Towers since 2013, and has signed up to changes to corporate governance at the company.
With its share price down 75% since IPO, IHS Towers' leadership has been under pressure from shareholders to take action to recover its IPO highs, or at least close the valuation gap with other large publicly traded towercos.
IHS Towers' leadership has resisted calls to give more control to major shareholder MTN over fears that greater mobile operator control would further destroy value by eroding the independent management necessary for a towerco to function. Winning the backing of long-time shareholder Wendel will assist IHS Towers' leadership in retaining independent control of the towerco.
The agreement
In joint statements published on January 16, IHS Towers and Wendel announced plans to better align IHS Towers' corporate governance with the best practices of U.S.-listed companies and to create greater alignment and accountability between the company’s board of directors and the shareholders. The moves are aiming to improve the general market perception of IHS Towers now that the company has been listed publicly for more than two years. Change is necessary for things to stay the same.
As part of this agreement, changes will be put forward at the 31 July 2024 Annual General Meeting:
IHS Towers’ Board would be declassified gradually over two years in 2024 and 2025 and, following IHS Towers’ 2025 AGM, all directors would be elected on an annual basis.
The ownership threshold for shareholders to nominate directors or bring business before a general meeting would be lowered from the current 30% to 10%, on an individual shareholder basis following IHS Towers’ 2024 AGM, and on an aggregate basis following the 2025 AGM.
A new right will be introduced for shareholders owning at least 25% of shares to requisition a general meeting following IHS Towers’ 2025 AGM.
The threshold for removing a director by shareholders’ vote would be lowered from the current 2/3 majority to a 50% majority.
However, within these terms, certain limitations would still apply to mobile operator shareholders on the ability to exercise those additional rights.
Disagreement continues
However, this might not be enough to win around other shareholders which have taken issue with IHS Towers management. Blackwells Capital LLC, a long-term shareholder in IHS Towers, demanded the immediate replacement of IHS Chairman and CEO Sam Darwish in a July 2023 shareholder letter.
The investment firm called for a reconstitution of the company's board of directors, following the company's recent strained financial performance. IHS Towers's leadership will be hoping the offer put forward alongside Wendel will win over the activist investor.
The letter followed a blow-up with another major shareholder where MTN's Nigeria operations blew up convention by awarding a 2,500 site renewal to competitor American Tower. In a relatively unprecedented move, the MNO opted to shift 2,500 tenancies on to existing and newly built towers in a rebuke to IHS Towers' management. Read more about the bust up here.
Whether IHS Towers' moves will be enough to turnaround its share price and bring investors onside remains to be seen, but the industry will breathe a sigh of relief to see matters moving towards a resolution at one of the world's largest towercos. In announcing the proposal, Sam Darwish, IHS Towers Chairman and CEO commented: “We believe the agreement announced today better aligns IHS Towers’ corporate governance with that of mature U.S.-listed companies, which was an important goal we set at the time of our public listing. With the support of our pre-IPO shareholder base as well as newer investors post listing, we continue to focus on executing our strategy of creating value for all our stakeholders.”
