While it may be debatable whether the proposed merger between Sprint and T-Mobile will be good for consumers, lease cancellations and cell tower decommissions could be significant for cell tower owners and cellular property owners. According to a recent article posted by Fierce Wireless,“If the merger is approved, the companies plan to shutter 35,000 towers and build 10,000 new towers.”
This should come as no surprise since gaining operating efficiencies and greater economies of scale are key drivers behind the merger. In a April 27, Reuters posting, MoffettNathanson analyst, Nicholas Del Deo states, “One of the major synergies that T-Mobile and Sprint would try to reap from the deal is decommissioning cell sites.”
The large tower companies are somewhat insulated from these merger effects due to the fact that their risk is diversified across thousands of towers. But for cellular property owners with a single site, the loss of the rental income from their cellular leases could pose a challenge. And since most cellular lease cancellations require minimal notice such as 30-days, the loss of income could occur without much warning.
The impact of the proposed merger could be similar to previous telecom mergers such as the AT&T/Cingular, Sprint/Nextel and T-Mobile/Metro PCS, all of which resulted in significant lease decommissions and cancellations for property owners. Some property owners may be able to insulate their properties from cancellation risk since, the merged companies plan to add 10,000 new towers, which are likely to be built to fill in areas where there are no comparable Sprint or T-Mobile towers or where greater efficiencies can be obtained by newer technologies in better locations. There could also be additional new equipment added to existing towers, which could provide additional income for some tower owners.
Will your cellular lease be affected? Would you benefit from a partnership with experienced cellular experts? One of the ground lease experts at Crescendo would be happy to speak with you about your specific concerns and situation, call us at 203.972.3200 or email us.