Why is Clearwire Terminating My Lease?

A number of landowners have been receiving termination letters from Clearwire for sites where Clearwire negotiated a lease agreement but failed to start construction.   The letters simply state that Clearwire is no longer interested in the site and is terminating under the termination language in the agreement.   For most owners this comes as somewhat of a shock because it appeared that Clearwire was actively pursuing the site.

From what we can gather, it appears that Clearwire simply ran out of money.  Do a google search for Clearwire funding- and you will easily find numerous news stories about Clearwire having blown through their development budget and Sprint’s unwillingness to invest more in Clearwire.  We aren’t saying that Clearwire is going bankrupt- but they definitely had short term funding issues.

A discussion with a Clearwire site acquisition agent indicated that he believed that the decisions were being made on a market by market basis.   It appears that Clearwire executives have decided that some markets are more important than others and that they would have to prioritize.   For instance, we heard that Tampa and Fort Myers are being put on indefinite hold so that other markets can be prioritized (like Miami).    This agent suggested that it was likely that Clearwire would be back to restart our client’s terminated lease in the near future perhaps in a matter of months.

However, another client of ours in Phoenix received a termination notice for an unbuilt Clearwire lease.  This client had a 6 month termination penalty in the lease agreement meaning that they will receive 6 months of rent upon termination.   If Clearwire intended to come back to this lease in a few months, it would have made better sense to keep the lease going rather than pay a 6 month termination penalty.   This suggests that Clearwire will not be back in a matter of months.

There have been numerous rumors swirling around lately involving some combination of Sprint/T-Mobile/Clearwire/Light Squared and mergers and acquisitions involving the same.   If a merger was in the works involving Clearwire, we could see that it would make sense to terminate the unbuilt leases as network goals would need to re-prioritized.   Interestingly enough- we hear that Light Squared projects were started and put on hold as well in at least some areas.

Unfortunately, for the landowner who received a termination notice, there is nothing that can be done.   We don’t believe that these lease terminations are site specific or related to the lease rate.   Thus, you can’t and shouldn’t offer Clearwire a reduced rent to try to encourage them to stay.   Either they will be back or they won’t- and you won’t factor into that decision.   Just keep the lease documentation and wait until to see if you hear from Clearwire again.  If you haven’t receive a termination notice, than don’t do anything.  Just let Clearwire build your site as soon as they ask.   If you were negotiating a lease with Clearwire and they stopped contacting you, just wait.  If you need help figuring out how much to charge Clearwire for their lease- please see http://www.steelintheair.com/Clearwire-Cell-Tower-Lease-Negotiation.html.

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