Consolidation of the Telecoms Market
In 2008, T Mobile and 3(H3G) announced a project which would result in the consolidation of equipment and infrastructure allowing both parties to operate from the same site. Unfortunately for the Landlord this will result in approximately 5,500 sites being lost. T Mobile and 3(H3G) hope this will lead to significant savings by reducing rent, rates and maintenance costs. Other companies have looked at the similar projects including Vodafone and Orange. These companies believe that in the current economic climate in order to remain competitive they have to reduce costs.
Consolidation will ultimately mean a reduction in the number of sites and therefore a potential reduction in rental income unless terms can be agreed. Of primary importance to the consolidation project working, landowners and agents have been asked to agree that agreements are put into joint names. Where this is not possible the grant of additional rights to create consolidation network sites will be needed.
This project is still in its early days and the approach from landlords and agents has varied. An article from Derek Blatt Chairman of the RICS Telecoms Forum Board, stated that ‘many landlords have been prepared to re-gear leases to obtain more secure future rental income and a stronger investment yield.’ Landlords and agents will be interested to see what happens to the surplus sites once they have been de-commissioned and will want to be aware of other companies such as Vodafone and Orange participating in similar projects. Derek Blatt also commented that ‘consolidation activities are still in their infancy and the market has yet to determine whether there will be a significant change to rents.’ Landlords and agents will be aware that when a site is vacated, generally they are entitled to a full reinstatement of their premises of which many landlords will be happy to see. This may offer the opportunity for negotiation and financial settlement.
Please contact Julian Mellis for further information regarding consolidation of the Telecoms Market (DD: 01244 409666 email: j.mellis@dentonclark.co.uk)