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Telecommunications Network Consolidation

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Two of the largest providers of mobile communications in the UK are in the process of consolidating their networks in a cost saving exercise. As a result telecoms landlords could potentially lose out on thousands of pounds a year...

T-Mobile (TMUK) and Hutchison 3G (3) have formed a 50:50 joint venture company called Mobile Broadband Networks Limited to manage the consolidation of their networks. The aim of the joint venture is to save £2 billion in costs over 10 years through a program of rationalisation that will ultimately reduce the number of cell sites that the two companies operate.

Known as Radio Access Network (RAN) Sharing, the consolidation process is now well under way and landlords of cell sites operated by TMUK and 3 are receiving letters requesting permission to assign leases into the joint names of TMUK and 3.

The letters generally include a simple form for landlords to sign and return in order to authorise the request. Most letters explain the background to the network consolidation and imply that the particular site in question will only be included in the future consolidated network if consent to assign is given by the landlord.

As you might expect, the matter is not so straight-forward. Whether or not the tenant has the right to assign depends on the terms of the lease and this point largely seems to be being ignored by the operators. There is also a question mark over whether the consolidation can be achieved without on site alterations or the installation of some additional equipment - again which may or may not be permitted by the terms of the lease.

By simply giving consent you could be missing out on the opportunity to gain additional rental income if the operator does not have the right to do what it is proposing.

Additionally, if you have granted leases to both TMUK and 3, you may find that the operator of the site that is not to be included in the future consolidated network will look for an exit strategy. It is therefore important for landlords to know what rights the tenant has to terminate the lease, if any.

If you receive a request to assign from TMUK or 3 we strongly advise that you do not sign up without obtaining legal and commercial advice from a solicitor and surveyor who both have specialist knowledge of the telecoms sector.

Keeble Hawson can provide detailed and commercial legal advice on the interpretation of your telecoms lease and whether the operator can do what it is claiming it can do. We can also recommend specialist surveyors who will be able to negotiate with the operator on your behalf to ensure that you get the best possible deal.

For further information contact: Paul Gibbon, a partner in our Commercial Property department - email: paulgibbon@keeblehawson.co.uk, direct telephone 0114 2906203.

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