Leasing Rooftop for Telco Towers

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Intricate details associated with entering in to an agreement with Telco for leasing your rooftop for cellular tower. It also provides some of the social and financials challenges associated with the leasing. It explains how you are entangled in the telcos scheme of things.

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Leasing Rooftop for Telco Towers

  1. 1. Lease Agreement of Rooftop Telecom Tower Senthil Kumar V Writing for a change
  2. 2. Most Important Point Telecos signs the lease agreement with a very long term in mind. While it is difficult for a telco to keep changing their tower from one place to other, it is nearly impossible for the building owner to terminate the agreement. In other words it is an unilateral, one-sided marriage of inconvenience made in haste.
  3. 3. Agreement Term ▪ Lease agreement is normally signed for a term of minimum 20 years and a maximum 30 years. ▪ There are minimal evidence of shorter term agreements ranging from 10 years to 15 years. ▪ Sometimes the agreement may have an automatic renewal at the end of the contract term. ▪ Ask for a 5 years agreement with an extension clause if mutually satisfied at the end of the 5 year term. ▪ Only telco can terminate the agreement pre-maturely. You have absolutely NO chance of terminating the agreement.
  4. 4. Monthly Rent ▪ Monthly rent ranges from 1.5x to 2x of the respective locations 2BHK house rent for a 100 Sq Ft space for tower, earthpit and trenching space. ▪ Monthly rent mentioned in the agreement includes the cost of maintenance and all statutory levies and taxes. ▪ Income tax will be deducted at source before disbursing the monthly rent. ▪ Monthly rent will be increased by 10% once in 3 years. ▪ No rent is paid for the first 2 to 3 months of agreement signing. ▪ 3 to 5 month rent is paid as a returnable security deposit on signing the agreement
  5. 5. Expansion of Tower Infrastructure ▪ Initially telcos will be installing a small setup for a basic repeater on a self-supported mast. ▪ Over a period of time they would change the mast with a full-fledged tower to support more antennae and repeaters. ▪ Battery bank will be replaced with a diesel generator. ▪ Electrical and data cables running in and out of the building will increase multi-fold. ▪ Telcos reserve the right to do such changes as a part of the agreement. ▪ Technology will be keep evolving and the tower keeps expanding. However the building owner does not get any monetory benefit out of it. ▪ You are liable to strengthen the building in future to support the ever increasing load demand by the Telco
  6. 6. Rules of contradiction ▪ If you want to lease the rooftop to another telco, you need to get no-objection permit from the existing telco. ▪ You need to provide space in the rooftop, separate earth-pit, cable trench ways to new telco. ▪ You need to leave empty space between existing tower and new tower as recommended by the existing telco. ▪ However if the telco wants to share the tower with other players, they can do without your approval and without paying additional rent. ▪ This clause highly contradicts with the first 3 points and monopolizes the benefits to the telco.
  7. 7. Continuation of Lease Agreement ▪ When you sell the building, the new owner ends-up serving the agreement till its term. ▪ However if the purchaser comes to know about the lease agreement, he can either reject the sale or ask for crazy prices. So you will be on a clear back-foot. ▪ If you want to pledge or hypothecate the building, telco should be informed and it is going to spell trouble in pledging/hypothecating. ▪ You have to indemnify the telco from all disputes arising on the title of the property and subsequent litigation.
  8. 8. Relocation at your expense ▪ In the event of Telco relocating to another building due to the fault of yours (such as your building violating municipal norms etc) then the entire relocation expenses will have to be borne by you. ▪ If you want to do any alteration to your building, you should intimate the telco in advance. If the alteration affects the telco’s operations, then you should provide them an alternate location temporarily.
  9. 9. Social Challenges ▪ Constructing a telco tower in your building will most likely get opposed by the tenants and your neighbors fearing the radiation. ▪ Neighbors would object digging trenches in front of their house. ▪ The house rent income would most probably go down in your building and in the neighboring houses. This would further increase social problems. ▪ Telcos wants you to lead and resolve such issues. Telco would not be speaking with tenants or neighbors to resolve such issues.
  10. 10. Access and maintenance nightmares ▪ Employees, Authorised Representatives, Security Guards, Technicians, Vendors, Contractors, Service Providers, Engineers, Supervisors or any other person/s authorized by Telco will have full rights to access your building 24x7 during the agreement term. (including Sundays, National Holidays, and other holidays) ▪ You have limited or no rights to verify them before permitting or restricting them from accessing the building. ▪ You may be asked to deposit a pair of keys with the Telco to access the rooftop. ▪ They can seek your help for accessing the building during nighttime as well with very little or no advanced notice. ▪ You need to maintain the leased area clean, well-lit and easily accessible for the Telco. ▪ Telco has rights to ask you to deploy a security guard at your expenses.
  11. 11. Arbitration ▪ Any dispute related to the tower lease will be taken up at the respective state capital jurisdiction only. ▪ So you need to be ready to shell out lots of money for advocate fees, travel & stay expenses in addition to the non-tangible regular work getting affected. ▪ You will have very minimal chance of winning the arbitration against the giant Telcos. ▪ Remember the Telcos have the power to buy-out anything they want.
  12. 12. Other problems related to towers ▪ Radiation levels are unclear and Telcos don’t mention that in the agreement. ▪ Diesel generators create large amount of noise and air pollution. ▪ Heavily loaded Towers, RC Structure, Battery Banks, rooftop mounted Diesel Generators reduces the building strength gradually. ▪ You can’t freely use your rooftop for occasional functions. ▪ Areas leased out for Earth-pit and Fiber trenches can’t be used for any other purpose during the contract term. ▪ In short, you are entangled badly for 20 years.
  13. 13. What you should do before signing the agreement? ▪ Read the agreement draft carefully and completely. ▪ If required read the document more than once. ▪ Underline and highlight every clause that is not understandable or you need clarification or unacceptable. ▪ If needed seek the services of an experienced lawyer. ▪ Speaks to the known and unknown building owners who have leased their building rooftop to telcos. ▪ Check if there are any municipal or government compliances and hurdles ▪ Find if the building occupants and neighbors are inline with the tower plan.
  14. 14. When you should opt for leasing out? While leasing is not favourable for most of the building owners, some can still find it a good way to make money. ▪If you have more than one property, you may consider leasing one of them. ▪If you have absolutely no future financial goals for next 2o years, you can lease. ▪If you have sufficient money or investment to cover up your unforseen large scale expenses in life, you can still lease out. ▪If you don’t worry about the falling rental income and neighbors bonding, you can lease.
  15. 15. Other ways of better utilizing your rooftop
  16. 16. Don’t mortgage your family silver for the shake of pennies. Money can be made in many other better ways…..
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