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Tanzania is the ninth African country where Bharti has executed such a deal since buying Kuwait-based Zain’s Africa assets across 17 countries, in the continent. Photo: Reuters
New Delhi: Bharti Airtel Ltd, the world’s third largest communications services provider, has signed an agreement with American Tower Corp., to sell approximately 1,350 towers in Tanzania.
“Under the agreement, American Tower may acquire up to approximately 100 additional sites currently in development for an additional consideration,” Bharti said in a statement on Monday. “Airtel will be the anchor tenant on the portfolio under a lease with a 10-year initial term,” the statement added.
This is the ninth African country where Bharti has executed such a deal since buying Kuwait-based Zain’s Africa assets across 17 countries, in the continent.
The deal is valued at around $179 million, according to a statement by American Tower to US stock exchanges. With this, Bharti has raised more than $2 billion from tower sales in Africa.
The deal is expected to be completed by the first half of 2016 and is aimed at improving Bharti’s ability to focus on its core business and help reduce debt, by reducing ongoing capital expenditure on passive infrastructure.
As reported by Mint in October, Bharti concluded the sale of around 8,300 towers in Africa across the continent. Bharti has thus far sold around 2,500 towers to Eaton in four countries, including Ghana, Uganda and Kenya, and another 700 towers in Burkina Faso.
Bharti was earlier in talks with Eaton to sell the Tanzania based telecom towers, but that deal lapsed.
The latest deal takes the number of towers sold to around 10,500, of the around 13,000 towers that the telco owns in the African continent.
On 21 October, Bharti announced that it had signed a total of seven deals to sell its towers for a total of $1.7 billion. Other companies that Bharti has sold its towers include Helios Towers Africa and IHS Holding Ltd.
ATC has also bought Bharti’s towers in Nigeria.
On 14 January, Bharti announced that it had finalised a deal to sell its telecom operations in Burkina Faso and Sierra Leone to France-based telecom operator Orange, for an estimated $900 million.
MADUDU YA KAMPUNI HII YA AMERICAN TOWER CORP.
More sneaky options schemes
Amidst backdating options scandals,
1.American Tower uses another legal tactic for hiding executive compensation - backdoor options filtered through a subsidiary.
By Bethany McLean, Fortune editor-at-large
October 17 2006: 11:06 AM EDT
(Fortune Magazine) -- Just when backdating options seemed like the state-of-the-art method for executives to line their pockets, along comes a crafty yet legal tactic that involves stashing stock grants in the furthest corners of the footnotes: Call them backdoor options.
A primer for firms hit by stock options scandal
As backdating options continues to ensnare corporate officers, a Boston-based company called American Tower has faced questions from the SEC and U.S. Attorney's office over its use of backdating. But backdating isn't the only eyebrow-raising element of their compensation strategies.
How Backdoor Options Work
Deep in American Tower's proxy lurks a sneaky scheme.
1. American Tower sets up a subsidiary.
2. Executives are allowed to purchase stock in the subsidiary.
3. Execs acquire stock through cash and a loan; they also get options to buy more shares.
4. The executives can force AT to buy them out within a certain period of time.
5. AT's purchases net employees millions in profits.
American Tower (Charts) has a market cap of $15 billion and owns the infrastructure, such as towers and rooftop structures, that wireless companies lease. Last May the company announced that a special committee of independent directors was reviewing its option-granting practices; in September, American Tower said it will have to restate more than three years of financial results. But a close look at its filings also reveals that top executives have made tens of millions from stock in subsidiary companies - information you won't see in the compensation table of its proxy statement.
hidden numbers
In the standard table in American Tower's proxy - the one that lists the salaries, bonuses and other compensation for the five highest-paid employees - you see that an executive named Michael Gearon, the company's vice chairman and the president of its international business, has earned $2 million in cash over the past three years and has gotten 665,000 options.
In 1998, Gearon sold Gearon Communications to American Tower and joined the company. He still lives in Atlanta, where his firm was based, and is a part-owner of the Atlanta Hawks. General counsel William Hess earned $1.8 million in cash and got 370,000 options over the past three years.
But in the tables detailing options exercises there's a footnote that says that during 2004, American Tower's Brazil operation, called ATC South America, granted "certain employees," including Gearon and Hess, options to purchase common stock of ATC South America at an exercise price of $1,349 per share. Those separate options were exercised in October 2005.
The footnote says that the "value realized" by Gearon and Hess was approximately $11.5 million and $2.7 million, respectively, and refers you to another section of the proxy called "Related Party Transactions." This section of proxies became notorious in the wake of Enron, because it's where CFO Andy Fastow's infamous partnerships were actually disclosed to investors.
In this section of American Tower's proxy, you learn that in March 2004 Gearon paid $1.2 million for a 1.6 percent stake in ATC South America; in October 2005, American Tower expects to pay him $3.7 million for that stake. Plus, Gearon got options - worth some $11.5 million a year and a half later - to acquire 6.7 percent of ATC South America. (Hess's options allowed him to acquire 1.6 percent of ATC South America.)
And you learn about another entity, ATC Mexico. Back in 2004, Gearon and Hess exercised their "previously disclosed" rights to require American Tower to buy their stakes in that entity. Afterward Gearon collected $36.2 million, much of it in American Tower stock that has since more than tripled.
If you check American Tower's 2005 10-K, you'll learn - in footnote 11 - that Gearon used just $1.7 million of cash plus a $6.7 million loan from American Tower to buy his stake in ATC Mexico.
So Gearon picked up cash and stock worth well over $30 million (a figure that doesn't take into account the stock's recent uptick) in these side deals - payments that aren't reflected in the compensation table in the proxy.
Hess and the others got some $20 million. Why would Gearon get all this additional money for running the international business when his job description is to run the international business? Why isn't this compensation disclosed in the compensation tables?
"It's a matter of judgment on the part of the company and its advisors," says Kenneth Laverriere, a partner at New York law firm Shearman & Sterling. "It's a close call."
James Taiclet, American Tower's CEO, says these agreements were put in place in 2001 when the international business didn't exist, and were done to provide Gearon and his team with the "incentive to take the risk" of building the business. He points out that Brazil and Mexico now account for 13 percent of the company's revenues and says "shareholders have benefited tremendously." He also says the agreements are "very thoroughly disclosed in the appropriate places."
Not that investors seem to care about any of this. American Tower's stock has doubled since 2005. That has helped Gearon, who's sold stock worth $40 million over that time period, grow his fortune even more.
2. American Tower Pays $14M To Settle Backdating Case
By Christine Caulfield
Law360, New York (December 14, 2007, 12:00 AM ET) -- Wireless communication company American Tower Corp. has settled a class action over stock options backdating, agreeing to give its shareholders $14 million to drop the case.
In a statement released Thursday, American Tower said the settlement would resolve all the claims against the company and two of its top executives, if approved by the Massachusetts district court.
The Boston-based company said it would continue to negotiate with its insurers about their contribution to the settlement.
U.S. District Judge Mark L. Wolf stayed the case pending a hearing on the motion for preliminary settlement approval on Feb. 19, 2008.
The action was filed in the Massachusetts court in May 2006 on behalf of shareholders who bought stock in American Tower between Feb.1 and May 24, 2006.
Named as co-defendants in the suit were American Tower chief executive James Taiclet, who allegedly sold 37,5000 shares for an inflated profit of $900,000 on March 13, 2006; and chief financial officer Bradley Singer, who allegedly pocketed $800,000 after exercising his stock options on March 10 last year.
The suit claimed the communications company backdated the stock option grants of the two directors and/or other executives to maximize the stock's profitability.
American Tower allegedly misled its investors when, in numerous proxy statements, it claimed that “the exercise price per share of each option was equal to the fair market value per share of the underlying stock as valued by the Board of Directors on the date of the grant.”
Further, in its annual financial report to the U.S. Securities and Exchange Commission, dated Mar. 15, 2006, the company falsely reported a loss of $0.44 per share and an expense sheet total of $801 million, the complaint alleged.
According to the shareholders, these statements were materially false and misleading because they neglected to mention that the option grants were in fact not made at fair market value or the closing price of the shares on the New York Stock Exchange on the date of the grant.
They also played down the company's expenses and inflated earnings as a result of the improper backdating, said the plaintiffs.
“Initially, even as the wrongful practice of backdating of options grants became public for a number of companies, American Tower made no disclosures to the effect that it too had committed these wrongful practices,” the complaint stated.
It wasn't until May 19, 2006 that the company issued a statement announcing the creation of a special committee of independent directors to conduct an internal investigation into its historical stock options practices.
The company admitted in the statement that, depending on the outcome of that probe, it might need to restate its previous financial reports. It also revealed that the SEC had launched an informal inquiry into the company's options grants.
Four days later American Tower said it had received a subpoena from the U.S. District Attorney for the Eastern District of New York calling for documents in connection to its option grant practices. It also announced a temporary suspension of its stock repurchase program in view of the investigations.
“The company's ultimate destiny is dependent on the integrity of management. In this particular case, the backdating of stock option grants to increase the profitability of the options is a classic example of loss confidence on the part of investors since management is effectively taking from shareholders in order to line their own pockets,” the plaintiffs said.
American Tower was one of scores of companies to face scrutiny by shareholders and regulators over their stock options practices since May last year. The SEC's enforcement division is still actively reviewing the books of dozens of publicly-listed companies, and a number have settled claims of backdating.
The plaintiffs are represented by Adkins, Kelston & Zavez PC, Lovell Stewart Halebian LLP and Bishop & Associates PSC.
The case is John S. Greenebaum et al., v. American Tower Corp et al., case number 06-ca-10933, in the U.S. District Court for the District of Massachusetts.
New Delhi: Bharti Airtel Ltd, the world’s third largest communications services provider, has signed an agreement with American Tower Corp., to sell approximately 1,350 towers in Tanzania.
“Under the agreement, American Tower may acquire up to approximately 100 additional sites currently in development for an additional consideration,” Bharti said in a statement on Monday. “Airtel will be the anchor tenant on the portfolio under a lease with a 10-year initial term,” the statement added.
This is the ninth African country where Bharti has executed such a deal since buying Kuwait-based Zain’s Africa assets across 17 countries, in the continent.
The deal is valued at around $179 million, according to a statement by American Tower to US stock exchanges. With this, Bharti has raised more than $2 billion from tower sales in Africa.
The deal is expected to be completed by the first half of 2016 and is aimed at improving Bharti’s ability to focus on its core business and help reduce debt, by reducing ongoing capital expenditure on passive infrastructure.
As reported by Mint in October, Bharti concluded the sale of around 8,300 towers in Africa across the continent. Bharti has thus far sold around 2,500 towers to Eaton in four countries, including Ghana, Uganda and Kenya, and another 700 towers in Burkina Faso.
Bharti was earlier in talks with Eaton to sell the Tanzania based telecom towers, but that deal lapsed.
The latest deal takes the number of towers sold to around 10,500, of the around 13,000 towers that the telco owns in the African continent.
On 21 October, Bharti announced that it had signed a total of seven deals to sell its towers for a total of $1.7 billion. Other companies that Bharti has sold its towers include Helios Towers Africa and IHS Holding Ltd.
ATC has also bought Bharti’s towers in Nigeria.
On 14 January, Bharti announced that it had finalised a deal to sell its telecom operations in Burkina Faso and Sierra Leone to France-based telecom operator Orange, for an estimated $900 million.
MADUDU YA KAMPUNI HII YA AMERICAN TOWER CORP.
More sneaky options schemes
Amidst backdating options scandals,
1.American Tower uses another legal tactic for hiding executive compensation - backdoor options filtered through a subsidiary.
By Bethany McLean, Fortune editor-at-large
October 17 2006: 11:06 AM EDT
(Fortune Magazine) -- Just when backdating options seemed like the state-of-the-art method for executives to line their pockets, along comes a crafty yet legal tactic that involves stashing stock grants in the furthest corners of the footnotes: Call them backdoor options.
A primer for firms hit by stock options scandal
As backdating options continues to ensnare corporate officers, a Boston-based company called American Tower has faced questions from the SEC and U.S. Attorney's office over its use of backdating. But backdating isn't the only eyebrow-raising element of their compensation strategies.
How Backdoor Options Work
Deep in American Tower's proxy lurks a sneaky scheme.
1. American Tower sets up a subsidiary.
2. Executives are allowed to purchase stock in the subsidiary.
3. Execs acquire stock through cash and a loan; they also get options to buy more shares.
4. The executives can force AT to buy them out within a certain period of time.
5. AT's purchases net employees millions in profits.
American Tower (Charts) has a market cap of $15 billion and owns the infrastructure, such as towers and rooftop structures, that wireless companies lease. Last May the company announced that a special committee of independent directors was reviewing its option-granting practices; in September, American Tower said it will have to restate more than three years of financial results. But a close look at its filings also reveals that top executives have made tens of millions from stock in subsidiary companies - information you won't see in the compensation table of its proxy statement.
hidden numbers
In the standard table in American Tower's proxy - the one that lists the salaries, bonuses and other compensation for the five highest-paid employees - you see that an executive named Michael Gearon, the company's vice chairman and the president of its international business, has earned $2 million in cash over the past three years and has gotten 665,000 options.
In 1998, Gearon sold Gearon Communications to American Tower and joined the company. He still lives in Atlanta, where his firm was based, and is a part-owner of the Atlanta Hawks. General counsel William Hess earned $1.8 million in cash and got 370,000 options over the past three years.
But in the tables detailing options exercises there's a footnote that says that during 2004, American Tower's Brazil operation, called ATC South America, granted "certain employees," including Gearon and Hess, options to purchase common stock of ATC South America at an exercise price of $1,349 per share. Those separate options were exercised in October 2005.
The footnote says that the "value realized" by Gearon and Hess was approximately $11.5 million and $2.7 million, respectively, and refers you to another section of the proxy called "Related Party Transactions." This section of proxies became notorious in the wake of Enron, because it's where CFO Andy Fastow's infamous partnerships were actually disclosed to investors.
In this section of American Tower's proxy, you learn that in March 2004 Gearon paid $1.2 million for a 1.6 percent stake in ATC South America; in October 2005, American Tower expects to pay him $3.7 million for that stake. Plus, Gearon got options - worth some $11.5 million a year and a half later - to acquire 6.7 percent of ATC South America. (Hess's options allowed him to acquire 1.6 percent of ATC South America.)
And you learn about another entity, ATC Mexico. Back in 2004, Gearon and Hess exercised their "previously disclosed" rights to require American Tower to buy their stakes in that entity. Afterward Gearon collected $36.2 million, much of it in American Tower stock that has since more than tripled.
If you check American Tower's 2005 10-K, you'll learn - in footnote 11 - that Gearon used just $1.7 million of cash plus a $6.7 million loan from American Tower to buy his stake in ATC Mexico.
So Gearon picked up cash and stock worth well over $30 million (a figure that doesn't take into account the stock's recent uptick) in these side deals - payments that aren't reflected in the compensation table in the proxy.
Hess and the others got some $20 million. Why would Gearon get all this additional money for running the international business when his job description is to run the international business? Why isn't this compensation disclosed in the compensation tables?
"It's a matter of judgment on the part of the company and its advisors," says Kenneth Laverriere, a partner at New York law firm Shearman & Sterling. "It's a close call."
James Taiclet, American Tower's CEO, says these agreements were put in place in 2001 when the international business didn't exist, and were done to provide Gearon and his team with the "incentive to take the risk" of building the business. He points out that Brazil and Mexico now account for 13 percent of the company's revenues and says "shareholders have benefited tremendously." He also says the agreements are "very thoroughly disclosed in the appropriate places."
Not that investors seem to care about any of this. American Tower's stock has doubled since 2005. That has helped Gearon, who's sold stock worth $40 million over that time period, grow his fortune even more.
2. American Tower Pays $14M To Settle Backdating Case
By Christine Caulfield
Law360, New York (December 14, 2007, 12:00 AM ET) -- Wireless communication company American Tower Corp. has settled a class action over stock options backdating, agreeing to give its shareholders $14 million to drop the case.
In a statement released Thursday, American Tower said the settlement would resolve all the claims against the company and two of its top executives, if approved by the Massachusetts district court.
The Boston-based company said it would continue to negotiate with its insurers about their contribution to the settlement.
U.S. District Judge Mark L. Wolf stayed the case pending a hearing on the motion for preliminary settlement approval on Feb. 19, 2008.
The action was filed in the Massachusetts court in May 2006 on behalf of shareholders who bought stock in American Tower between Feb.1 and May 24, 2006.
Named as co-defendants in the suit were American Tower chief executive James Taiclet, who allegedly sold 37,5000 shares for an inflated profit of $900,000 on March 13, 2006; and chief financial officer Bradley Singer, who allegedly pocketed $800,000 after exercising his stock options on March 10 last year.
The suit claimed the communications company backdated the stock option grants of the two directors and/or other executives to maximize the stock's profitability.
American Tower allegedly misled its investors when, in numerous proxy statements, it claimed that “the exercise price per share of each option was equal to the fair market value per share of the underlying stock as valued by the Board of Directors on the date of the grant.”
Further, in its annual financial report to the U.S. Securities and Exchange Commission, dated Mar. 15, 2006, the company falsely reported a loss of $0.44 per share and an expense sheet total of $801 million, the complaint alleged.
According to the shareholders, these statements were materially false and misleading because they neglected to mention that the option grants were in fact not made at fair market value or the closing price of the shares on the New York Stock Exchange on the date of the grant.
They also played down the company's expenses and inflated earnings as a result of the improper backdating, said the plaintiffs.
“Initially, even as the wrongful practice of backdating of options grants became public for a number of companies, American Tower made no disclosures to the effect that it too had committed these wrongful practices,” the complaint stated.
It wasn't until May 19, 2006 that the company issued a statement announcing the creation of a special committee of independent directors to conduct an internal investigation into its historical stock options practices.
The company admitted in the statement that, depending on the outcome of that probe, it might need to restate its previous financial reports. It also revealed that the SEC had launched an informal inquiry into the company's options grants.
Four days later American Tower said it had received a subpoena from the U.S. District Attorney for the Eastern District of New York calling for documents in connection to its option grant practices. It also announced a temporary suspension of its stock repurchase program in view of the investigations.
“The company's ultimate destiny is dependent on the integrity of management. In this particular case, the backdating of stock option grants to increase the profitability of the options is a classic example of loss confidence on the part of investors since management is effectively taking from shareholders in order to line their own pockets,” the plaintiffs said.
American Tower was one of scores of companies to face scrutiny by shareholders and regulators over their stock options practices since May last year. The SEC's enforcement division is still actively reviewing the books of dozens of publicly-listed companies, and a number have settled claims of backdating.
The plaintiffs are represented by Adkins, Kelston & Zavez PC, Lovell Stewart Halebian LLP and Bishop & Associates PSC.
The case is John S. Greenebaum et al., v. American Tower Corp et al., case number 06-ca-10933, in the U.S. District Court for the District of Massachusetts.