American Tower Vows to Enforce Contracts of Bankrupt Indian Carrier
American Tower (AMT) lost a revenue stream in India yesterday when Tata Teleservices Limited, a debt-laden carrier, announced it will shut its operations soon.
For the quarter ended June 30, 2017, Tata Teleservices accounted for approximately $80 million, or five percent of American Tower’s consolidated property revenues, including approximately $32 million of pass-through revenue. In addition, Tata Teleservices accounted for approximately $40 million in gross margin for the quarter ended June 30, 2017, according to an AMT press release. As of September 30, the average remaining non-cancellable contract term with Tata Teleservices was in excess of six years.
“While AMT would be exposed to a shutdown of Tata Teleservices’ business, we do not expect an impact to financials over the mid-to-near term,” said market analyst Amir Rozwadowski of Barclays.
More than 90 percent of the revenue and gross margin outlined above was generated on sites acquired as part of the Viom Networks Limited (“Viom”) transaction completed in April of 2016. American Tower Corporation holds a 51 percent controlling interest in Viom, while Tata Teleservices and Tata Sons Limited hold approximately 33 percent and two percent minority interests, respectively.
American Tower said it expects to fully enforce the average non-cancelable remaining contract terms on the leases with Tata Teleservices as well as the other contractual provisions included in the Viom transaction.