It's impossible to connect mobile phone users without towers, and Vodafone Idea came close to a collapse when it wasn't able to pay the rent for the same. But it was able to survive by convincing tower companies such as Indus Tower and American Tower Company (ATC) to accept payment in parts. In the mean time inability of India's third-largest telco to make payments in full, has left a Rs 3,374 crore dent in ATC's earnings.
Little respite after conversion of debt to stakes
Earlier this year, Vodafone Idea told ATC that it would stick to partial payments for paying dues, while issuing debentures worth Rs 1,600 crore to the tower firm. It hasn't been able to resume full payments despite converting its debt to the government into a 33 per cent stake for the state. This has caused a Rs 3,000 crore damage to intangible assets in India for ATC, along with another impairment of Rs 795 crore to tower and network assets.
Drags down ATC
This is why the ATC reported a Rs 5,881crore loss despite a 10.6 per cent rise in revenues. As of now, Vodafone Idea need to repay Rs 2,000 crore to ATC, and the firm will get a 3 per cent stake in it after the conversion of debentures worth Rs 1,600 crore. The American company had acquired Vodafone Idea's standalone tower business back in 2017.
The deby which Vi owes to ATC is significantly less than what it needs to pay Indus Towers, and the telco still faces a total debt pile of Rs 2 lakh crore. On the other hand, its peers Airtel and Jio have been moving forward with their respective 5G rollouts.
