In a recent filing to the US Securities and Exchange Commission (SEC), American Tower Corporation (ATC) has said that Vodafone Idea Limited (Vi), its largest customer in India, may not be able to meet its operating obligations, including making future payments, which could have a material adverse effect on ATC’s business and operational results.
According to ATC, in the quarter ended September 2022, Vi’s shortfall in payments was roughly $48 million, which has led ATC to defer recognition of revenue on the shortfall sum till payment is received from Vi. In a filing to US SEC dated October 27, 2022, the company said that the recognition of revenue on any future shortfalls in payment of contractual amounts will be similarly deferred. Based on indications from Vi, the company expected to defer recognition of a similar amount for the three months ended December 31, 2022, pending resolution.
ATC added that while Vi has communicated its intent to fulfil the full amount of its contractual obligations starting January 1, 2023, no assurance can be given that this will occur. The company said that Vi has indicated it would make a partial payment of its contractual amounts owed to the company under tenant leases for the remainder of 2022, including amounts owed for the three months ended September 30, 2022.
Under risk factors, ATC has also cautioned that the recent preferential bond issue by Vi to it is subject to conditions that may not be met. A key condition is the government converting Rs 161.3 billion accrued interest on Vi’s deferred adjusted gross revenue (AGR)-related dues into equity.
