29 October 2009

Rural update - autumn: Telecoms - testing times


There have been changes recently in how operators use and share masts. Network consolidation, presented to landlords as a simple assignment by one operator to two, appears de facto to be site sharing. Under the terms of many leases, site sharing gives the landlord a percentage of any extra rent paid to the operator. Assignment does not. New technology means that little additional equipment is needed for the ‘assignment’ and so landlords cannot argue for an increase in rent, either on assignment or at rent review. T-Mobile and Hutchison 3G have already undertaken a program of network consolidation and Vodafone plans to do the same.

Initially landlords were able to negotiate favourable terms, receiving a premium and other incentives for assignment. Operators are now taking a firmer stance. Landowners face a stark choice: sign, or have their mast decommissioned. With this in mind, now might be the time to blow the dust from existing telecoms leases.

  • If you receive a letter asking for consent to an assignment, speak to your agent or call us before you give consent.
  • Look at your lease. Is assignment prohibited? This could help you achieve a better deal if the mast is in a good position with no alternative sites or masts nearby.
  • If assignment is allowed, you cannot use a demand for an increase in the rent because of the ‘assignment’ as a reason to withhold consent.
  • It is very unlikely that a network consolidation will fall under the site sharing provision of the lease.
  • Is it worth working with a national agent handling a number of such applications on a block basis to try and achieve a better financial result? Success may depend on your lease terms and the availability of other masts in the area.

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Category: Article

Client types: Technology, Farms and estates