Carson Block: AMT Engaged in Value Destroying Binge

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July 17 (Bloomberg) -- Muddy Waters Founder and Director of Research Carson Block discusses possible fraud at American Tower over tower acquisitions in Brazil with Erik Schatzker on Bloomberg Television's "Market Makers." (Source: Bloomberg)

Good to see you, as always.

This is american tower.

Before we begin the conversation, we have made every attempt possible to contact american tower to get a response.

We've not heard back from the company.

We are waiting for a statement and bring it to you as soon as we have got it.

118 pages.

Manifold reasons about why you have concerns about american tauber.

What is number one?

Number one in our mind is the emerging markets business.

This is really the cornerstone of the great growth story the stock tells.

The stock tells the story.

It has been screaming.

When we got into the field and rolled up our sleeves and figured out what is going on in the emerging markets.

It is very different than what the company tells you.

It has been evil to create the illusion of growth in part that the lending business is giving carriers money that they give right back to it as revenue.

That is one of the issues.

It is also the way the business is working overseas, it is not going to work as well as the house and the u.s., and investors did not understand that.

You make a number of allegations.

Did you call the company before you published this report and get any comment from them?

We never told them where muddy waters and about to publish a report, but safe to say we have had a number of these issues on a number of locations.

You raise the possibility of fraud.

You seem to have taken pains not to call them of fraud but say there is potential for fraud.

Why do you say that?

What we did find is in one transaction in which they claim to of spend $585 million by and towers and brazil, the actual number paid for the towers was really only in the low worth 300 range.

A differential of about $250 million.

If the company knows that was the case and does not disclose that, that would be fraud, but the company did not know they did not pay that much money for towers, that would be something else.

How could a company possibly not know what it paid?

Take out you are asking me to speculate, and there a number of possibilities.

-- you are asking me to speculate, and there are a number of possibilities.

Very difficult for us to say what did happen, but we know what did not happen.

Taken you have also given us pictures in the report.

$584.5 million transaction located in brazil.

Does not look like much of anything.

This is the company that appraise the transaction.

Did you actually go there?

We did not go to the appraisers address.

We came across the information after we have been looking at towers.

Surprisingly google maps is quite robust and rowboat -- and brazil.

It is possible the company is not aware of the discrepancy between the purchase price and appraisal value of the wireless towers it bought?

I cannot speculate on what the company does and does not know.

Clearly they need to investigate this.

The reason i raise it is there are lots of reasons why you have concerns about american power.

I want to draw a distinction about what you'd think might be going on and what you believe is definitely going on here yen, go back to the point you made first about the company affectively lending money to customers and then recovering the interest and principal, but recognizing it as revenue from wire lists leases.

You believe that is going on?

I do not believe the company would dispute that.

They say we will give you 200, but you need to give us that more money.

Tacoma the that pass muster with accountants?

-- did that pass muster with the accountants?

As far as we know.

I brought this to his attention and ask if you have ever looked at this, because uncertain pen -- situations, there is potential for abuse.

At a certain point it becomes a round trip of money.

As far as i know there is nothing illegal or improper, but very misleading.

While we're on the subject of the transaction in brazil you cite a bunch of financial records but did not provide those.

Are you planning to publish?

There are links in the report.

People have to dig into the footnotes and play around but these financials are publicly available.

These are for the company that they acquired, sharing and the former parent company.

We obtained those financials.

We said this does not make sense, because what they disclosed as valuation metrics of the company should have been producing more ebitda.

The first set of records we of looked at.

The other set for the central bank of brazil record that shows the influence -- the influx of money into the country.

So american tire were sent in $335 million.

-american-- american tower.

By the way, we have spoken with multiple sources who are familiar with this transaction, including two people who understand the transaction as it closed.

Putting that decide which -- to decide for a moment, the best- case scenario would have been you paid some money offshore when you know the sellers are brazilian and trying to evade taxes.

We did not think that is the case.

Is it possible this to under 50 million is missing?

Missing is the word i would use.

Missing from accounting records is one thing coming missing as and someone else has it is something else entirely.

It is possible, certainly.

This text has been automatically generated. It may not be 100% accurate.


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