In the annual report for 2022, it was stated that Vodafone Idea has been running continuously running short of payments and it might affect the Indian operations of Boston-based American Tower Corporation (ATC).
ATC provides tower infrastructure solutions in India to telecom operators. They do the needful through its subsidiary called ATC Telecom Infrastructure.
Vodafone Idea is reportedly the largest customer of ATC in India. It further constitutes around 3.2% of its total revenue of 10.7 billion USD for the year ending on December 31 (2022).
What is the reason for the delay?
The main reason reported for Vodafone Idea’s delayed payments is said to be the weak cash flows and the other reason is the absence of fundraising, stated the experts.
In the annual report, ATC said, “Continued partial payments from VIL (Vodafone Idea) could have further negative effects on our fixed assets, intangible assets or goodwill, could result in additional impairments and could have a material adverse effect on our business, results of operations or financial condition.”
The report further stated: “VIL may not be able to meet its operating obligations, including making payments to us in the future,” it added.
According to industry estimates, it has been reported that the telecom operator is in debt for over Rs 3,000 crore to ATC.
What will happen if Vodafone Idea is unable to pay the amount to ATC?
It was in February when Vodafone Idea allotted the equity convertible debt bonds to ATC Telecom Infrastructure which was worth Rs 1,600 crore. If Vodafone Idea is incapable to pay the amount of Rs 1,600 crore in the next 18 months, then it would give ATC the option to convert the dues into equity at a price of Rs 10 per share, the report stated.
In 2022, Vodafone Idea said to ATC that it will resume the payments in full as mentioned under its contractual obligations which were implemented on January 1, 2023. But, at the start of the year 2023, the telco stated that it is incapable to resume the payments in full of its contractual obligations. And the telecom company stated that it would instead continue to make partial payments- ATC confirmed.
In India, ATC owns 76,826 towers.
