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31/05/2006
Landowners advised to stand firm on telecoms contracts as Vodafone profits tumble
Farmers and landowners with telecom mast sites have been warned that companies are reviewing their portfolios and are looking to decommission some rural sites that are proving to be non-profitable. The warning, from leading rural telecom consultants Fisher German, follows news that Vodafone has reported a record corporate loss of £14.9 billion.
"All the telecommunications companies have been looking at their portfolio of telecoms sites. At Fisher German we have noticed over the last few months that Vodafone has been more active than the others in terminating their sites – this includes sites that have not yet been built, as well as those that are already in operation," comments Fisher German partner Mark Newton.
"If sites do not meet their financial targets, they are being decommissioned, particularly non-profitable rural ones, so that the landowners will no longer be receiving any rent."
Telecoms companies have been trying to put pressure on landlords to keep any rental increases to a minimum, notes Mr Newton. But Fisher German, which negotiates contracts on behalf of landowners and has built up a database of over 3,000 telecoms sites, has managed to earn substantial increases for many clients.
"We often find that telecoms leases entered into several years ago were below market value. We strongly recommend landowners seek advice if they are approached by a telecoms company to review the rent or share the site with another operator," says Mr Newton.
Competition within the telecoms sector for cheaper mobile phone charges has put pressure on companies to review their portfolio of sites. The use of broadband for telephone use will put further financial pressure on these companies. "We expect over the next five years that several of these companies will merge, making more sites redundant," adds Mr Newton.
Against this backdrop of increased financial pressure, a large number of telecommunications leases are now coming to the end of their 10-year period and the leases need to be renewed.
"A lot of owners and also surveyors are not aware that this is a one-off opportunity to increase the rental and also to incorporate modern clauses within their lease," comments Mr Newton. "The agents acting for the operators have been reporting that most surveyors acting for landowners are not aware of these opportunities."
Other opportunities exist for landowners to renegotiate more favourable terms. These include:
· A new UK Government £350 million contract to O2 Airwave to provide a digital mobile voice and data service called Fire Link for the fire and rescue services in England. New equipment may be needed at existing Airwave telecommunications sites that will host the new service, which may provide an opportunity to increase the rental.
· Quintel has deployed the first multi-operator 3G-shared antenna system at Trentham in Staffordshire. The system, that provides coverage on the O2 mast for Vodafone and 3, aims to cut down the proliferation of telecommunications masts and allows up to five mobile operators to share a single antenna. Landowners should find out how sites are being used and check the wording of their leases, as they may be due substantial additional payments for site sharing.
· Despite financial pressure, revenue for mobile companies in the UK grew by 16% to £13.6 billion in the year to September 2005 according to Ofcom's latest interim report. There are now 62.5 million subscriptions in the UK - more than one mobile telephone per man, woman and child.
Landowners looking for a free appraisal of their existing telecoms leases should contact Fisher German, on 01858 411246 and speak to Mark Newton or Chris Hicks.
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"All the telecommunications companies have been looking at their portfolio of telecoms sites. At Fisher German we have noticed over the last few months that Vodafone has been more active than the others in terminating their sites – this includes sites that have not yet been built, as well as those that are already in operation," comments Fisher German partner Mark Newton.
"If sites do not meet their financial targets, they are being decommissioned, particularly non-profitable rural ones, so that the landowners will no longer be receiving any rent."
Telecoms companies have been trying to put pressure on landlords to keep any rental increases to a minimum, notes Mr Newton. But Fisher German, which negotiates contracts on behalf of landowners and has built up a database of over 3,000 telecoms sites, has managed to earn substantial increases for many clients.
"We often find that telecoms leases entered into several years ago were below market value. We strongly recommend landowners seek advice if they are approached by a telecoms company to review the rent or share the site with another operator," says Mr Newton.
Competition within the telecoms sector for cheaper mobile phone charges has put pressure on companies to review their portfolio of sites. The use of broadband for telephone use will put further financial pressure on these companies. "We expect over the next five years that several of these companies will merge, making more sites redundant," adds Mr Newton.
Against this backdrop of increased financial pressure, a large number of telecommunications leases are now coming to the end of their 10-year period and the leases need to be renewed.
"A lot of owners and also surveyors are not aware that this is a one-off opportunity to increase the rental and also to incorporate modern clauses within their lease," comments Mr Newton. "The agents acting for the operators have been reporting that most surveyors acting for landowners are not aware of these opportunities."
Other opportunities exist for landowners to renegotiate more favourable terms. These include:
· A new UK Government £350 million contract to O2 Airwave to provide a digital mobile voice and data service called Fire Link for the fire and rescue services in England. New equipment may be needed at existing Airwave telecommunications sites that will host the new service, which may provide an opportunity to increase the rental.
· Quintel has deployed the first multi-operator 3G-shared antenna system at Trentham in Staffordshire. The system, that provides coverage on the O2 mast for Vodafone and 3, aims to cut down the proliferation of telecommunications masts and allows up to five mobile operators to share a single antenna. Landowners should find out how sites are being used and check the wording of their leases, as they may be due substantial additional payments for site sharing.
· Despite financial pressure, revenue for mobile companies in the UK grew by 16% to £13.6 billion in the year to September 2005 according to Ofcom's latest interim report. There are now 62.5 million subscriptions in the UK - more than one mobile telephone per man, woman and child.
Landowners looking for a free appraisal of their existing telecoms leases should contact Fisher German, on 01858 411246 and speak to Mark Newton or Chris Hicks.
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