American Tower Corp books $322 mn goodwill impairment charge for India unit

American Tower Corp (ATC) has informed the US Securities and Exchange Commission (SEC) that it has taken a $322 million (Rs 2,677 crore approx) goodwill impairment charge for its India unit in the quarter ended September 2023, amid continuing business challenges in the country.

This is 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 (read: ATC) 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, including goodwill. The result indicated that the 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.

The US tower firm added that it continues to evaluate the carrying value of its Indian assets, which may result in realisation of additional impairment expenses or other similar charges.

The fair value, typically, is the estimated price at which an asset is bought or sold when buyer and seller agree on a price. The carrying value, in turn, is the cost of an asset less accumulated depreciation.

In the global SEC filing, ATC said 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.

ATC, on its part, has been exploring the sale of an equity stake in its India operation to one or more private investors, amid payment woes at its largest India client, Vodafone Idea (Vi). ET had reported in its August 24 edition that ATC is set to cede majority control in its India unit to US private equity firm I Squared Capital.

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% of its consolidated balance of $12.2 billion.

“Additionally, a significant reduction in customer-related cash flows in India could also impact our tower portfolio and network location intangibles… the carrying values of our tower portfolio and network location intangibles in India were $0.9 billion and $0.3 billion, respectively, as of September 30, 2023, which represent 11% and 8% of our consolidated balances of $8.7 billion and $3.3 billion, respectively,” the tower company said.

It added that the carrying value of goodwill in India was $0.6 billion as of September 30, 2023, which represented 4% of its consolidated balance of $12.6 billion.