American Tower Corporation (ATC) in its latest annual report for 2022 said that the financial results of its Indian unit, ATC Telecom Infrastructure Private Limited (ATC TIPL) could take a blow if there are any more shortfalls in payments by Vodafone Idea Limited (Vi). 

The company said that they would periodically evaluate the value of its Indian assets, as a means to further check for fault lines. Some of the factors included in this are increased tenant attrition exceeding forecast, additional Vi payment shortfalls and carrier tenant bankruptcies, as stated in the report. Any significant cut in customer-related cash flows would affect its 76,826- strong tower portfolio and network location intangible assets in the country. 

Vi currently represent 3.2 per cent of ATC’s total revenue ($10.71 billion), as on December 31, 2022. The company, in a filing dated February 2023, warned US Securities and Exchange Commission (SEC) that Vi would not be able to resume payments in full of its contractual obligations. ATC has already taken a $411.6 million impairment charge due to Vi’s partial payments. ATC also informed SEC that it is trying to sell the equity stake in its India operation to one or more private investors. 

The company added in the report that Asia-Pacific property segment revenue decrease of $122.1 million was attributable to a decrease of $78.3 million in other revenue, primarily due to revenue reserves of $52.5 million related to a Vi shortfall and decrease of $13.1 million due to straight-line accounting, primarily related to write-off of Vi balances. The company has not reported any goodwill impairment in CY022 as the fair value of each reporting units (including in India) is higher than the carrying amount.

The company added that when the carrying amount exceeds fair value, an impairment loss is recognised for the excess amount. On February 2023, Vi allotted optional convertible debentures (OCDs) worth Rs 16 billion, to ATC TIPL. These proceeds are being used to clear US firm’s dues. Vi owes ATC about Rs 20 billion.