American Tower Corp (ATC), the Boston-based tower company, has reported an unrealised loss of nearly $16 million on the optionally convertible debentures (OCDs) issued to it by Vodafone Idea (Vi), its biggest customer in India. In a filing with the US Securities and Exchange Commission (SEC), ATC said it recognised unrealised losses of $15.7 million for the Vi OCDs held as of March 31, 2023. According to an ET report, ATC also stated that any unrealised holding gains and losses for the Vi OCDs are recorded in ‘other income (expense)’ in its consolidated statements of operations for the quarter that ended March 2023.
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The issuance of OCDs to ATC’s India unit, ATC Telecom Infrastructure Pvt Ltd (ATC TIPL), was concluded in February when Vi allotted OCDs worth Rs 1,600 crore to the company. The proceeds are being used by Vi to clear its dues to the US tower firm, which amount to around Rs 2,000 crore. However, the Vi stock price fell nearly 15% from the time the OCDs were issued in February to the end of the March quarter, resulting in ATC’s unrealised loss.
“The significant input to the fair value of Vi’s OCDs is the Vi equity share price underlying the instruments, less a liquidity discount,” ATC said in its SEC filing. The Vi OCDs will mature in two tranches of INR 800 crore each in August 2023 and August 2024.
ATC’s unrealised loss on Vi’s OCDs reflects the telecom company’s ongoing financial struggles and its inability to close its pending external fundraising. Vi’s stock price remains under pressure due to ongoing market uncertainty and the company’s highly leveraged balance sheet. The telco's stock regained value a little when the announcement of KM Birla joining the board again surfaced. To make a longer-term recovery, Vi's stock needs successful fundraising.
