Evaluating offers to Expand Lease Area / HOME

MOBILE TOWER LEASE EXPANSIONS

Many landowners are being approached by the wireless carriers or the tower companies to grant additional ground space or equipment area space beyond what was allowed in the original mobile site lease agreement. There are a number of reasons why the carriers or tower companies are looking to expand.

  1. When the mobile site was originally designed, the original lessee may have assumed that the lease area only needed to accommodate their current and future equipment. Since that time, collocation between carriers on each other's towers is completely acceptable and in fact encouraged through policies such as the Australian Communications Industry Forum (ACIF) Code . So while the lease agreement may allow for subleasing, the ground space is simply not large enough to allow for subleasing.
  2. Because of mergers, (like the Hutchison 3/Vodafone merger) the carrier may wish to consolidate their equipment all at one site. By doing so, they reduce their costs for operating a mobile network by reducing the lease rate for duplicate sites. Sometimes this requires expansion beyond the current lease area to accommodate the additional equipment.
  3. In other cases, the wireless carrier intends to add another service to their network. For instance, a carrier may start to deploy WiMAX services . This additional service may require additional cabinets/shelter and/or additional antennas.
  4. Some tower companies are attempting to "purchase" additional ground space when they try to extend the lease or purchase the remainder of the lease via a mobile site lease buyout. By tying the additional space to the lump sum purchase offer for the mobile site lease, they can often get the landowner to give away additional space before the landowner understands the value of the additional revenue they would have otherwise received for the expansion.

There should be a number of questions that a landowner approached to grant additional space should be asking:

What is the purpose of the additional space?

How much space is being requested?

How much space is actually needed for the proposed use?

What will the impact to the landower be from the use of the additional space?

What are other landowner's getting for expansion of lease area?

Does the expansion provide me an opportunity to renegotiate an otherwise poor lease?

These questions are all questions that we can help you answer. Don't leave money on the table when you negotiate for the expansion. Don't ask for far more than is reasonable for the expansion. By doing so, you may end up with the carrier going to another location. Make sure that you aren't giving up more than necessary and if you are, make sure that you are getting fair market value for the expansion of your lease. It is also important to recognise that you DON'T need to agree to an extension of the lease term to get compensation for the expansion.

If you have been approached by a wireless carrier or tower company to expand your lease area, please don't hesitate to contact us. We will be happy to discuss your situation and indicate whether we can help you with your negotiation.