Telecoms image

Telecoms operators – assignment, sharing and break notices – watch out!

To cut costs, many operators are consolidating their operations. They are increasingly applying for consent to assign, to share and to alter and it can be confusing for a landlord who is bombarded with all of these requests. This note is designed to guide you through the jargon and assist you in making a decision on how to respond.

Who are they?

The main players are Orange, T-Mobile, Vodafone, 02, Hutchison 3G and Airwave.

On 1 July 2010 T-Mobile and Orange UK formally merged to form Everything Everywhere Limited. T-Mobile already had in place an agreement with Hutchison 3G which permits them to share sites (through a company called MBNL). As a landlord, this means you could face a request for consent to assign to Everything Everywhere Limited which in effect would mean 3 operators could occupy a site for the same rent.

Vodafone and 02 also have a site sharing deal managed by Cornerstone. They are increasingly approaching landlords requesting rights to share, failing which they claim they will vacate the site. They are also requesting rent reductions.

Airwave deal with emergency services calls (under TETRA) and are currently upgrading their rooftop sites in London in readiness for the Olympics. Landlords are increasingly receiving requests for consent to add equipment cabinets and upgrade antenna. Leases should be carefully checked before consent is granted.

If you have more than one operator on a site, they will usually decide which agreement is more favourable to them and then seek to assign that more favourable agreement into joint names or into their newly formed company and then will seek to terminate the other agreement by serving a break notice.

What to do when you receive a request for consent to alter/assign/share:

  • Check that the request has been made by or on behalf of the tenant. Often the operators’ agents write informally and if there is no request made by or on behalf of the “tenant” there can be no valid request.
  • Check the relevant provisions in the lease.
  • If you receive a request for consent to assign, check whether the operators will need to alter or add to their equipment (generally in order to site share an operator will only need to replace a card in an equipment cabin and leases usually permit replacing apparatus in equipment cabins without landlord’s consent).
  • You have an obligation to grant or refuse consent within a “reasonable time” which (depending on the circumstances) can be as short as a few days.
  • If you fail to grant or refuse consent within a reasonable time you will be deemed to be unreasonably refusing consent. If they have not supplied all of the information you need, to keep time running, our recommendation is that you respond by requesting reasonable further information in order to enable you time to consider the request. Once you have been provided with all the information you need to make a decision on whether or not to grant consent time will start to run. Do not make any comment on the application apart from asking for further information to make it clear that no decision has been made (if you want to negotiate make sure any documents are clearly marked “without prejudice”).
  • If you cannot refuse consent check the rent review provisions to see whether there is a provision for a review on assignment. You cannot grant or refuse consent subject to an increase in rent.

What to do when you receive a break notice:

  • Review the relevant provisions re: break and service of notices in the Lease and check the notice carefully.
  • If you may want to challenge the notice, do not respond or even acknowledge receipt of it but refer it to solicitors as soon as possible.
  • In many leases the operators are only permitted to break a lease if they lose their code powers or if they lose the beneficial use of the equipment (for example; if there is interference with their signal). Many operators (particularly H3G) are attempting to break their own lease but in fact remain on the site, sharing under a different lease. If the break notice is not challenged a landlord would lose the rent from the H3G lease (and it is unlikely that the rent on the remaining lease would be reviewed up to the same level). If the operator has not lost its code powers or beneficial use of the site, then the break notice may be invalid.

We have a specialist telecoms team at Clarke Willmott LLP including Kary Withers, Bonnie Martin and Beverley Pike who will be happy to deal with your queries.

Please note that this note is for general information purposes only and should not be relied on without seeking specific advice from us.