American Tower Corp (ATC) has cautioned that its Indian unit, ATC Telecom Infrastructure Pvt Ltd (ATC TIPL), could suffer financially if Vodafone Idea (Vi), its largest customer in India, fails to make further payments. According to ET, in its latest annual report for 2022, the US tower company stated that it would evaluate the carrying value of its Indian assets periodically, which could result in the realisation of additional impairment expenses or similar charges. Events that could negatively affect the financial results of its India reporting unit include increased tenant attrition exceeding ATC's forecast, carrier tenant bankruptcies, and additional Vi payment shortfalls. Vi represented about 3.2% of ATC's total revenue ($10.71 billion) in the year ended December 31, 2022.
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ATC has already taken a $411.6 million impairment charge due to Vi's partial payments, and in a February 2023 filing to the US Securities and Exchange Commission, the company warned that Vi would not be able to resume payments in full of its contractual obligations. ATC also said it was exploring the sale of an equity stake in its Indian operation to one or more private investors amid a challenging business environment. It subsequently offered to sell a 50% stake in its wholly-owned Indian unit, ATC-TIPL, implying co-control with a potential equal partner as it was looking to cut its exposure in the country.
The dip in ATC's Asia-Pacific property revenue was partly due to Vi's payment shortfalls, the report said. The decrease in the Asia-Pacific property segment revenue in CY2022 was also due to a decrease of $21.3 million in pass-through revenue, primarily due to revenue reserves of $42 million related to the Vi shortfall. ATC has not identified any goodwill impairment in CY2022 as the fair value of each of its reporting units, including in India, is higher than the carrying amount. However, the fair value of ATC's India reporting unit, which is based on the present value of forecasted future cash flows, exceeded the carrying value by around 24%, the company said.
