American Tower Corp (ATC) has informed the US Securities and Exchange Commission (SEC) that it has taken a $322 million ( ₹2,677 crore approx) goodwill impairment charge for its India unit in the quarter ended September 2023, amid continuing business challenges in the country.
A goodwill impairment charge refers to assets whose value drops or is lost completely, rendering them completely worthless.
Since the fair value of ATC’s India unit has dropped below its carrying amount in the September quarter, the Boston-based telecom tower company said in a recent global SEC filing,“The company performed an interim quantitative goodwill impairment test as of September 30, 2023, using information obtained from third parties to compare the fair value of the India reporting unit to its carrying amount of the company’s India reporting unit exceeded its estimated fair value… As a result, the company recorded a goodwill impairment charge of $322 million for the three and nine months ended September 30, 2023,” ATC said in its US SEC filing, dated October 26.
Vodafone Idea blues
The troubles for ATC’s India operations are largely a result of non-payment of vendor dues by Vodafone Idea, which continues to struggle to raise funds to pay off dues to its network partners, including Indus Towers and Nokia. Back in February 2023, loss-making Vi had allotted OCDs worth ₹1,600 crore to ATC Telecom Infrastructure against its dues. Vi is estimated to owe ATC around ₹2,000 crore. Earlier in August, Vodafone Idea announced the extension of the redemption period of its optionally convertible debentures (OCD), allotted to ATC, by one year.
ATC mentioned in the SEC filing that the company had concluded that “a triggering event occurred as of September 30, 2023,” with respect to its India reporting unit primarily due to indications of value received from third parties in connection with ATC’s review of various strategic alternatives for its India operations, including the potential sale of equity interests in its India operations.
Among other India-related disclosures in its latest SEC filing, ATC said the carrying value of its tenant-related intangibles in India was $0.4 billion as of September 30, 2023, which represented 3 per cent of its consolidated balance of $12.2 billion.