American Tower Corporation to take $411-million impairment charge over Vi 'part-payments'

American Tower Corporation (ATC) has taken a $411.6-million (about ₹3,374 crore) impairment charge after Vodafone Idea (Vi), its largest customer in India, recently said it won't be able to resume full payments towards contractual obligations and would continue making partial payments.

The US company said while announcing its fourth quarter earnings for 2022 that Vi had communicated in early 2023 that "it would not be able to resume payments in full, and would instead continue to make partial payments". It said ATC "considered these recent developments and the uncertainty with respect to amounts owed under its tenant leases when conducting annual impairment assessments for long-lived assets and goodwill in India, and as a result, impaired the tenant-related intangible assets for Vi, which resulted in an impairment of $411.6 million".

The tower company also took an additional $97-million (₹795 crore) impairment on tower and network location intangible assets in India. It, though, did not reveal if this too was related to the uncertainties around contractual payments from cash-strapped Vi. Further, ATC said the company's 2023 outlook includes about $75 million (₹615 crore) incremental reserves associated with Vi in India, which will drag its adjusted funds from operations (AFFO), attributable to the company's common stockholders per share, by $0.16.


ATC posted a 10.6% year-on-year increase in revenue to $2,705 million for the quarter to December 2022, but reported a $717 million quarterly net loss, partly stung by impairment expenses in India.

ET's queries to ATC remained unanswered till press time. Late February, Vi allotted optionally convertible debentures (OCDs) worth ₹1,600 crore to ATC Telecom Infrastructure (ATC-TIPL), an ATC subsidiary. The proceeds will be used to clear the US tower firm's dues. Vi owes ATC an estimated ₹2,000 crore.

ATC-TIPL will hold 3.18% in the telco, assuming full conversion of the OCDs issued, while Vi's promoters will own 48.76% - UK's Vodafone 31.27% and India's Aditya Birla Group 17.49% - in the telco. The government will hold 32.09% in Vi.

At Vi's December quarter earnings call last month, chief executive Akshaya Moondra had said the loss-making telco needs to get funding first to be able to make investments and improve its operational cash flows before addressing the vendor payments situation.

Vi, he had said, could start clearing vendor dues only after there is sufficient cash generation from operations. Vi is also having trouble clearing dues of more than ₹7,000 crore of another tower company, Indus Towers.

The carrier's cash balance was ₹160 crore at December 31, 2022, while net debt stood at around ₹2.22 lakh crore, including deferred spectrum payment obligations of around ₹1.39 lakh crore and adjusted gross revenue (AGR) liability of ₹69,910 crore.

Vi's vendors, though, have lately been more optimistic about the company's survival chances, especially after the government converted the telco's accrued interest into equity, which is expected to open the doors for refinancing some of Vi's bank debt.