Telecoms Turbulence
The Telecoms sector remains fraught. Site operators and infrastructure providers continue to take aggressive stances in their quest for new leases for existing masts at vastly reduced rents, through serving legal notices and threatening court action on landowners. The Court of Session (CoS) has now published its ruling on the appeal against the decision of the Lands Tribunal for Scotland (LTS) re the EE & H3G v DUNCAN case.
Regrettably for landlords (site providers) of telecoms mast sites, the outcomes were in favour of the tenants (site operators). In summary, the CoS ruled that:
- The LTS was wrong to dismiss the operators’ application to the LTS for a new lease.
- Para 33 Notices are valid in Scotland in relation to existing leases extended from year to year on tacit relocation.
- Para 33 Notices served upon a party to an existing agreement must specify a date for the modification sought that is at least 6 months in the future, but the date need not be on the anniversary of the day when the previously agreed term expired.
- Written leases extended from year to year on tacit relocation are deemed to continue to be written leases – they do not become unwritten leases.
What does all the above mean in simple English?
Essentially, it is acceptable for site operators (the tenants) of existing telecoms leases in Scotland to serve Para 33 Notices on site providers (the landlords) to apply for the terms of the lease to be varied in line with the new Electronic Communications Code (ECC). The key changes that the tenants are likely to seek are:
- for the rent to be assessed on a ‘no network scheme’ basis i.e. the site valuation must disregard that it is being used for telecoms purposes, thus rents will tumble
- to obtain rights to assign, share and upgrade the facility without additional payment
…and if such terms are not agreed within a 6 month period of a valid Notice having been served the site operator can apply to the LTS to determine the terms of the lease.
Most landlords served a Para 33 Notice will now have to enter negotiations with tenants to modify the terms of leases running on tacit relocation. The only alternative option is for landlords to serve notice to remove the mast under Para 31 of the ECC, but there are only four grounds to achieve this:
- substantial breaches by the operator of its obligations under the agreement.
- persistent delays by the operator in making payments to the site provider.
- the site provider intends to redevelop all or part of the land to which the code agreement relates.
- the public interest test is not met, i.e. it is not in the public interest to have access to a choice of high quality electronic communications services.
Unless landlords can prove one of the above grounds exist, it leaves them with the choice to either negotiate or go to the Lands Tribunal. An alternative is to seek to sell the freehold or long leasehold rights to a third party and leave them to deal with the site operators and thus obtain a capital sum rather than a depleted annual rent.
D&R’s specialist telecoms team can negotiate terms for existing site leases, new site leases or sale, to ensure that landlords achieve the best terms available in the market (rental or capital value) and in line with current legislation. Call us today on 0131 449 6212.
Derek Bathgate, D&R Lead Director for Telecoms
