Comms service vendor AT&T Latin America Corp has announced that it would face a funding gap from the fourth quarter as it unveiled a litany of problems it is currently grappling with.
The company said it was facing the funding gap because of a series of problems. These include a more pessimistic view of economic conditions in South America for the rest of this year and into next. The company will also suffer because a planned tax sharing agreement with majority shareholder AT&T Corp, planned to kick in from the fourth quarter, will no longer take place. AT&T has also informed the company that it will not advance any more financing or credit support. To add further insult, AT&T said it will approach certain multinational clients directly, meaning that AT&T Latin America will essentially become a last mile provider to such customers.
AT&T Latin America also said it was in litigation over obligations to one of its vendors, Siemens AG, and because of an adverse decision now assumed that it will have to pay its obligations earlier than planned. The company added it believed it will have greater difficulty drawing on unused and renewing local lines of credit in Latin America.
Washington DC-based AT&T Latin America is 69% owned by AT&T Corp. The US giant also controls 95% of voting rights in the company.