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ATC TIPL had to take impairments with Vi continuing to make partial payments to the vendor

In the Asia-Pacific region, ATC TIPL’s top tenants are Bharti Airtel Limited, Reliance Jio and VIL, accounting for an aggregate of 90 percent of Asia-Pacific property segment revenue.

American Tower Company in its annual results has reviewed long-lived assets for impairment (as of December 31).

VIL accounts for 3.2 percent of ATC’s total revenue as on December 2022.

It stated, “In the third quarter of 2022, ATC’s largest customer in India, Vodafone Idea Limited (“VIL”), communicated that it would make partial payments of its contractual amounts owed and indicated that it would continue to make partial payments for the remainder of 2022. In late 2022, VIL had communicated its intent to resume payments in full under its contractual obligations owed to the company beginning on January 1, 2023. However, in early 2023, VIL communicated that it would not be able to resume payments in full of its contractual obligations owed to the company, and that it would instead continue to make partial payments.

ATC considered these recent developments and the uncertainty with respect to amounts owed under its tenant leases when conducting its annual impairment assessments for long-lived assets in India. A probability weighted assessment was performed, incorporating current and expected industry and market conditions and trends and, as a result, the company determined that certain fixed and intangible assets had been impaired during the year ended December 31, 2022.

  • An impairment of $97.0 million was taken on tower and network location intangible assets in India.
  • ATC also impaired the tenant-related intangible assets for VIL, which resulted in an impairment of $411.6 million.”

In October 2022, and as subsequently amended in February 2023, a subsidiary of the company, ATC Telecom Infrastructure Private Limited (“ATC TIPL”) and VIL had 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.

On February 16, 2023, ATC TIPL entered into a 12.0 billion INR (approximately $145.1 million at the date of signing) unsecured term loan with a maturity date that is one year from the date of the first draw thereunder (the “India Term Loan”). On February 17, 2023, ATC TIPL borrowed 10.0 billion INR (approximately $120.7 million at the date of borrowing) under the India Term Loan. The India Term Loan bears interest at the three month treasury bill rate as announced by the Financial Benchmarks India Private Limited at the time of borrowing plus a margin of 1.95%. Any outstanding principal and accrued but unpaid interest will be due and payable in full at maturity. The India Term Loan does not require amortization of principal and may be paid prior to maturity in whole or in part at the ATC TIPL’s option without penalty or premium.

However, India is not the only country where ATC had to take impairment. During the year ended December 31, 2022, apart from India, ATC impaired tenant relationships related to fiber in Mexico.

During the year ended December 31, 2021, impairment charges also related to a fully impaired tenant relationship in Africa.

Complete report,

CT Bureau

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