Cell Tower Lease Termination
Cell Tower Lease Terminations
If you are a landowner or a building owner who is currently engaged in a cellular lease with Nextel, Cingular, or Alltel, it’s possible that you have already received a notice of termination due to their mergers with Sprint, AT&T, or Verizon, respectively. If you currently have a lease with MetroPCS, Clearwire, or Leap (Cricket), there is a chance that you may receive a termination notice in the upcoming years due to their mergers with T-Mobile, Sprint, or AT&T respectively.
Historically, lease terminations in the cell tower business have been rare. The most common reason for termination of a lease agreement is due to mergers between larger wireless carriers. Below are a few examples of mergers that caused cell site lease terminations:
Collectively, these mergers resulted in the termination of 60,000 cell site leases. In the last few years, most terminations are a result of the T-Mobile/Sprint merger. Due to duplication and redundancy in their network, T Mobile pledged to decommission 35,000 sites out the combined 120,000 T-Mobile and Sprint had at the time of their merger. Far fewer leases are terminated because the wireless carrier or tower company moves from one location to another, although it does occur. So, if you have received a threat of termination from a tower company or wireless carrier, in most cases you can rest safely knowing that the lease is unlikely to be terminated. More than likely they are just using the threat of termination to attempt to renegotiate your cellular tower lease.
What To Do If You Receive a Formal Notice of Termination
If you are one of the unfortunate lease holders that receives a notice of termination for your cell site lease, what you do next depends upon what type of lease you have.
Building Owners and Cell Sites
Termination notices from wireless carriers to building owners typically request that the carriers (e.g., the tenant) be allowed to leave equipment at the cell site. The tenant will suggest that the equipment is valuable and that agreeing to keep it will make your property more attractive to other wireless carriers. In some cases, there is value to keeping the steel platform upon which the carrier has installed its equipment. However, as for the rest of the equipment, including coaxial cables, we advise that you request its removal, as well as the restoration of the rooftop to its original condition. If not, you will end up removing it on your own dime. It is highly unlikely that another carrier would reuse that equipment.
You may also receive an offer from the wireless carrier, or the contractor assigned by them to decommission the cell site. They may offer $5,000 to $50,000 to not have to remove the equipment. Typically, they make this offer because it is going to cost them more to remove the equipment. These offers are typically negotiable. However, you should ALWAYS require that they remove any batteries or other hazardous equipment or waste.
Landowners and Cell Towers
If you are a landowner who is leasing ground space for a tower on your property and there are no active wireless carriers on the tower, you will receive one of two different requests. However, what they don’t tell you is much more important:
The tenant will ask if you want to leave the tower on the property
In this case, it becomes a bit more difficult to decide what to do. The downside is that if the tower is never used by another wireless carrier and you become responsible for removing it. Many land use ordinances have clauses that require the landowner to remove the tower if it is not used for a fixed period, often 1 year. If you are required to remove the tower, you might end up paying $25,000 or more to remove the tower. However, there is an upside to keeping the tower. It is possible that another wireless carrier might be interested in using the tower. While we can’t help you find another wireless carrier, we can advise you on whether there is a good probability of someone being interested in using it in the future, based upon the location of other towers in the area.
The tenant will ask you to abate (pause) the rent for a period of a few years while they try to find another tenant
They will continue to market and maintain the tower, but you won’t get any rent during that time. If you don’t agree, they usually threaten to terminate the lease. As in the above situation, you might be better off having the tower removed, especially if there isn’t much probability of future users on the tower. In general, we don’t believe that a tower company should be entitled to keep the tower on the property without paying rent. If they know that another wireless carrier will be interested, they won’t terminate the lease regardless of whether you agree to abate the rent. Whatever you do, do not agree to an abatement if the amendment releases the tower company from removing the tower if they are unsuccessful at finding another subtenant.
Need Help with A Notice of Termination for Your Cell Tower Lease?
If you have received a notice of termination, feel free to reach out to us. We are happy to take a quick look at your site and advise you whether it is worth your time to retain us to do further analysis. You can rest assured if we believe that your lease is worthless, we will tell you that without charging you. However, if we think they might be an opportunity to improve your situation either in the short or long term, we will provide a proposal for services and tell you what our services will cost and what we expect to review and find in our evaluation.
If you are worried about termination but have not yet received a notice: You might have been contacted by a company (other than the company with whom you are engaged with in a lease), who has suggested that your existing cell site lease might be terminated if you do not agree to certain amendments. This strategy is used to persuade landowners to decrease their rental revenue and may or may not signify that there is a real risk of termination. Often these third-party companies use scare tactics to frighten landowners into selling the rights to their lease. Steel in the Air can help you to determine the likelihood that your list might be terminated. For more information, see our page on cell site lease renegotiations.