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ATC lists Vi as a major risk factor

American Tower Corporation in its filing to the United States Securities and Exchange Commission has listed its overdue payment from Vodafone Idea as a major risk factor.

It says under the RISK FACTORS heading , “Our largest customer in India is VIL, which represented approximately 2% and 3% of our total revenue for the three and nine months ended September 30, 2022, respectively. During the three months ended September 30, 2022, VIL indicated that 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.

For the three months ended September 30, 2022, the shortfall in payments totaled approximately $48 million. We have deferred recognition of revenue on the shortfall amount until payment is received. Recognition of revenue on any future shortfalls in payment of contractual amounts will be similarly deferred. Based on indications from VIL, we expect to defer recognition of a similar amount for the three months ended December 31, 2022, pending resolution. VIL has communicated its intent to fulfill the full amount of its contractual obligations commencing January 1, 2023, although no assurance can be given that this will occur.

On October 21, 2022, ATC TIPL and VIL notified the stock exchange of India that both parties have board approvals in relation to an issuance of convertible debentures pursuant to which, in exchange for VIL’s payment of certain amounts towards accounts receivables, ATC TIPL shall pay equivalent amounts towards subscription to convertible debentures issued by VIL. The convertible debentures are to be repaid by VIL with interest and ATC TIPL has the option to convert the debentures into equity of VIL. The issuance of the debentures is subject to certain conditions precedent, which may not be met. VIL may not be able to meet its operating obligations, including making payments to us in the future, which could have a material adverse effect on our business and results of operations.

Due to the long-term nature of our customer leases, we depend on the continued financial strength of our customers. Many communications service providers operate with substantial levels of debt. In our international operations, many of our customers are subsidiaries of global telecommunications companies. These subsidiaries may not have the explicit or implied financial support of their parent entities.

Due to the long-term nature of our customer leases, we depend on the continued financial strength of our customers. Many communications service providers operate with substantial levels of debt. In our international operations, many of our customers are subsidiaries of global telecommunications companies. These subsidiaries may not have the explicit or implied financial support of their parent entities.

In addition, many of our customers and potential customers rely on capital raising activities to fund their operations and capital expenditures, which may be more difficult or expensive in the event of downturns in the economy or disruptions in the financial and credit markets, such as the current environment driven by the significant disruptions caused by factors such as the COVID-19 pandemic, inflation, rising interest rates and supply chain disruptions. If our customers or potential customers are unable to raise adequate capital to fund their business plans or face capital constraints, they may reduce their spending, file for bankruptcy or reduce or terminate operations, which could materially and adversely affect demand for our communications infrastructure and our services business.

In the ordinary course of our business, we do occasionally experience disputes with our customers, generally regarding the interpretation of terms in our leases. Historically, we have resolved these disputes in a manner that did not have a material adverse effect on us or our relationships with our customers. However, it is possible that such disputes could lead to a termination of our leases with those customers, a material adverse modification of the terms of those leases or a deterioration in our relationships with those customers that leads to a failure to obtain new business from them, any of which could have a material adverse effect on our business, results of operations or financial condition. If we are forced to resolve any of these disputes through litigation, our relationship with the applicable customer could be terminated or damaged, which could lead to decreased revenue or increased costs, resulting in a corresponding adverse effect on our business, results of operations or financial condition”

For complete filing document, https://www.sec.gov/ix?doc=/Archives/edgar/data/0001053507/000105350722000118/amt-20220930.htm#i707ef5cba39d48078557279f81eb7200_124.

CT Bureau

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