Recently T-Mobile and Sprint announced a merger that will make them the second largest wireless carrier in the US. For more details, please see this article we posted the previous Monday on LinkedIn regarding the impact of the T-Mobile/Sprint merger on the public tower companies. Already we have received numerous emails and calls regarding what landowners should expect regarding their Sprint or T-Mobile leases.
Here is what you should know:
1. The merger still has to be approved by the Department of Justice and the FCC.
2. DOJ and FCC approval probability are less than 50% but may improve if the combined company is willing to divest spectrum or markets.
3. Assuming the merger is approved, the combined company will be terminating 35,000 cell sites out of 110,000 combined.
4. This will occur over multiple years.
5. But, it is highly doubtful that any terminations will occur within 18 months.
6. Sprint sites are definitely more likely to be decommissioned then T-Mobile sites.
7. If you have both Sprint and T-Mobile on the same location, there is a strong likelihood that one of them won’t be there in 5 years.
8. If Sprint and T-Mobile are on separate structures near each other, there is a strong likelihood that one of them won’t be there in 5 years.
9. There will be a small percentage of occasions where it makes more sense for the company to keep a Sprint site over a T-Mobile site.
10. There will be even a smaller percentage of occasions where both sites will be kept.
11. If you received a lease buyout offer regarding a T-Mobile or Sprint lease or a tower company lease where T-Mobile and Sprint are sub-tenants, you may see the offer pulled back or reduced.
12. If you have already signed an agreement to sell a T-Mobile or Sprint lease, don’t be surprised if the buyer looks to renegotiate the terms or chooses not to close.
13. The combined company has said that it will be “business as usual” while they try to get approval for the merger, but we think there will be some changes. Such as:
14. If you recently signed a lease with Sprint or T-Mobile which hasn’t commenced, they may choose not to go forward with the lease.
15. If you have been approached by either company for a new lease, they may go quiet for some time while they try to figure out what they need or don’t need in the combined network.
16. For some proposed equipment modifications on existing sites, there may be a delay while the combined company examines what equipment they need or don’t need at each of their sites.
17. Leaseholders should definitely not rush to renegotiate their leases even though there will likely be a lot of marketing directed at them suggesting that time is of the essence.
18. After past mergers, the market typically takes some time to adjust, meaning that valuations are thrown out the windows but will ultimately rationalize.
19. Despite this volatility, you are unlikely to get less in the future for your lease either in renegotiation or a buyout than you will the day or week after a merger is announced.
20. In other words, you have time to make an informed decision about your cell site lease assets.
Steel in the Air, Inc. is available to discuss your situation and help you understand the ramifications to your cell site leases as needed. Please contact us if you have any questions.