Consolidations and amalgamations news

Demand continues to increase for access to high quality mobile phone data coupled with the ever-growing requirement to have a superfast connection in the palm of your hand. As a result, the pressure on mobile phone operators to improve coverage and reduce mobile phone blackspots is a constant challenge.

Undertaking day to day tasks on your handheld device has now become the norm which in turn puts pressure on operators not only to give faster data to the public but also to upgrade existing cell sites to accommodate new equipment and build new sites to infill and strengthen existing coverage. The technology to provide faster data has significantly improved but still relies on a network of telecommunication base station sites, and the demand for large numbers of new base stations is only likely to increase in future years with the advent of 5G rolling ever closer and new technologies such as IOT (Internet of Things) and LTE (Long Term Evolution).

As a property or landowner with a mast located on your property, you probably already have or will soon receive an application to upgrade equipment, assign the lease, or even to renew the existing Lease. Cell;cm Chartered Surveyors would strongly recommend that you seek specialist advice from a firm who acts purely for landlords and not for the operators. It is likely that very attractive terms can be negotiated, including the rent, updated lease terms, payment of premiums and a very healthy contribution towards your costs.

With operators looking to enhance their networks, increase their profit margins and reduce costs, operators have been looking at network consolidation as a means of achieving these objectives. This has led to various Radio Access Network Sharing Agreements and outright purchases as we have seen recently with the purchase of Everything Everywhere by BT. Also in recent years Telefonica & Vodafone have created a joint venture company called Cornerstone Telecommunications Infrastructure Limited (CTIL), whose aim is to merge the two networks of Vodafone & Telefonica into one combined network.

These consolidations present Operators and site providers with great opportunities to re-gear leases, and Cell:cm Chartered Surveyors are increasingly finding many agreements where there is huge potential to improve the rent and other terms when the lease is renegotiated. Not only will we achieve the highest possible rent, but we will ensure that other terms such as the rent review clause will be on the best possible basis to ensure your rent grows as much as possible.
Our specialist team have the required knowledge and manage an extensive and varied database of comparable telecommunications sites. This means that we can often achieve highly competitive rents at rent reviews, lease renewals and new site negotiations.

There have also been movements across Europe to maximise operators income. Telefonica, for example, has revealed plans to list its infrastructure unit Telxius before the end of 2016. Launched in February this year, Telxius manages and monetises the Spanish incumbent’s global infrastructure. The subsidiary oversees 16,000 cell sites and more than 31,000 kilometres of fibre optic cable. “Telefonica has established Telxius as a standalone company with the objective of more effectively capturing the value from operators’ use of the infrastructure to satisfy the significant telecommunication data traffic growth expects over the next years,” said Telefonica, in a statement in August 2016.
Telefonica said it intends to float at least 25% of Telxius, and will apply to list its shares in Barcelona, Bilbao, Madrid and Valencia. The listing is expected to take place during the second half of 2016. Telxius’ pro forma revenue for the year ended 2015 was €691 million and its operating income before depreciation and amortization (OIBDA) was €323 million. “Telxius has a balanced business, with high quality assets exposed to developed markets and emerging economies, both with strong growth in data demand,” said Telefonica.

In a separate filing with Spain’s stock market regulator, Telefonica confirmed it has begun a strategic review of O2 UK, including preparatory work regarding an initial public offering. An IPO has been on the cards since Telefonica’s bid to sell O2 to local rival 3UK was blocked by the European Commission earlier this year. A float would raise funds that would help Telefonica pay off some its hefty debt. Telefonica insisted it plans to retain a majority stake in O2 regardless of the outcome of its strategic review.

For further advice about how we can assist you to make a positive impact on your interests, please contact Cell:cm Chartered Surveyors.

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