American Tower Corporation not sure that Vodafone Idea will be able to clear dues in January

Mobile tower company American Tower Corporation (ATC) on Monday expressed uncertainty around Vodafone Idea's intent to clear its dues by January.

Last month, shareholders of debt-ridden Vodafone Idea have approved issuing shares worth Rs 1,600 crore to ATC Telecom Infrastructure -- Indian arm of ATC-- on a preferential basis to settle dues of the infrastructure vendor by converting the due amount into equity, if the amount remained unpaid in 18 months.

During the September 2022 quarter, ATC's largest customer in India Vodafone Idea (VIL) indicated that it would make a partial payment of its contractual amounts owed to the company under tenant leases for the remainder of 2022, including amounts owed for the three months ended September 30, 2022.

During the September quarter, the shortfall in payments from VIL totalled approximately USD 48 million (about Rs 392 crore).

"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.

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"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 fulfil the full amount of its contractual obligations commencing January 1, 2023, although no assurance can be given that this will occur," ATC said in a SEC (Securities Exchange Commission) filing.

VIL in a filing last month had said that the optionally-convertible debentures issued to ATC would be subject to certain conditions precedent, including inter alia the approval of the shareholders of the company and the government of India which would have converted the interest from deferment of adjusted gross revenue and spectrum dues owed by the company.

VIL has opted for converting about Rs 16,000 crore of interest liability payable to the government into equity, which will amount to around 33 per cent stake in the company while promoters' holding will come down to 50 per cent from 74.99 per cent.

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The government has given telecom operators an option of paying the interest for four years of deferment on the deferred spectrum installments and AGR dues by way of conversion into equity of the NPV of such interest amount.

The government is yet to convert the debt into equity. As on September 30 this year, the company's total gross debt, excluding lease liabilities and including interest accrued but not due, stood at Rs 2,20,320 crore.