American Tower Corporation (ATC) has in a recent filing to the US Securities and Exchange Commission (SEC) said that Vodafone Idea (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 the US tower company’s business and results of operations.
It added that in the quarter ended September 2022, Vi’s shortfall in payments was roughly $48 million (about Rs 391 crore), which has led the Bostonbased tower company to defer recognition of revenue on the shortfall sum till payment is received from its lossmaking customer. “Recognition of revenue on any future shortfalls in payment of contractual amounts will be similarly deferred…based on indications from Vi, we expect to defer recognition of a similar amount for the three months ended December 31, 2022, pending resolution,” ATC said in US SEC filing, dated October 27.
The US tower company 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. “Our largest customer in India is Vi, which represented (around) 2% and 3% of our total revenue for the three and nine months ended September 30, 2022, respectively…Vi has indicated it would make a partial payment of its contractual amounts owed to us under tenant leases for the remainder of 2022, including amounts owed for the three months ended September 30, 2022,” ATC said.
Under risk factors, the US tower company 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 the Rs 16,130 crore accrued interest on Vi’s deferred AGR-related dues into equity. “The issuance of the debentures is subject to certain conditions precedent, which may not be met,” ATC said in its SEC filing seen by ET.
On October 21, Vi’s board had cleared the issue of rupee-denominated, optionally convertible, unsecured, unrated and unlisted debentures (OCDs) to ATC Telecom Infrastructure (ATC) to raise Rs 1,600 crore. The loss-making telco plans to use the cash to repay dues to the US tower company estimated at under Rs 2,000 crore.
But Vi’s CEO Akshaya Moondra recently said the cash-strapped telco hasn’t heard back from the government since April on converting its accrued interest on deferred AGR related dues into equity.
ATC did not reply to ET’s queries on whether it had set any specific deadline by which time Vi needs to ensure the government converts its accrued interest on deferred AGR dues into equity. It also did not comment on its future course of action to recover its dues from Vi.
It added that in the quarter ended September 2022, Vi’s shortfall in payments was roughly $48 million (about Rs 391 crore), which has led the Bostonbased tower company to defer recognition of revenue on the shortfall sum till payment is received from its lossmaking customer. “Recognition of revenue on any future shortfalls in payment of contractual amounts will be similarly deferred…based on indications from Vi, we expect to defer recognition of a similar amount for the three months ended December 31, 2022, pending resolution,” ATC said in US SEC filing, dated October 27.
The US tower company 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. “Our largest customer in India is Vi, which represented (around) 2% and 3% of our total revenue for the three and nine months ended September 30, 2022, respectively…Vi has indicated it would make a partial payment of its contractual amounts owed to us under tenant leases for the remainder of 2022, including amounts owed for the three months ended September 30, 2022,” ATC said.
Under risk factors, the US tower company 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 the Rs 16,130 crore accrued interest on Vi’s deferred AGR-related dues into equity. “The issuance of the debentures is subject to certain conditions precedent, which may not be met,” ATC said in its SEC filing seen by ET.
On October 21, Vi’s board had cleared the issue of rupee-denominated, optionally convertible, unsecured, unrated and unlisted debentures (OCDs) to ATC Telecom Infrastructure (ATC) to raise Rs 1,600 crore. The loss-making telco plans to use the cash to repay dues to the US tower company estimated at under Rs 2,000 crore.
But Vi’s CEO Akshaya Moondra recently said the cash-strapped telco hasn’t heard back from the government since April on converting its accrued interest on deferred AGR related dues into equity.
ATC did not reply to ET’s queries on whether it had set any specific deadline by which time Vi needs to ensure the government converts its accrued interest on deferred AGR dues into equity. It also did not comment on its future course of action to recover its dues from Vi.
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