Many landowners who have leased land for a cell tower on their property are receiving letters from third party companies. These letters suggest to the landowner that due to wireless carrier consolidation and due to technology, that the cell tower lease may be terminated early. By selling the lease to one of these companies, the landowner averts the risk of early termination and can recieve a lump sum immediately.
What is important to note is that these companies would not be interested in buying the lease if they felt that there was a significant risk that the lease would, in fact, be terminated. The reality is that cell towers are going to be around for a long time and the leases will continue. That is not to say that your particular cell tower lease is not susceptible to termination, especially in light of carrier consolidation. Recently, wireless companies like AT&T and Cingular have merged. (Both AT&T and Cingular are trademarks of their respective companies). Estimates of how many duplicative sites will be terminated as a result of this merger range from 8,000 to 20,000 sites. While the exact number is unknown, some landowners will receive termination letters in the mail. It is possible to determine whether or not your particular site is susceptible to termination by reviewing the cell towers in your area.
The sale of the land leases for a lump sum is one way of averting this risk. Additionally, there are other reasons why an individual landowner might want to consider selling his cell tower lease rights. These reasons include a scenario where the landowner has plans to sell the underlying property in the next few years. Another scenario is where the lump sum payment can be used to extinguish existing high interest debt.
One area that every landowner contemplating selling a cell tower lease should be concerned with is the taxation of the transaction. It is imperative that you consult with your accountant regarding any offer and whether or not the payment is susceptible to capital gains treatment.
Lastly, there are industry experts available who can assist you in the determination of whether or not the sale of your lease asset is a sensible decision. Make sure that before you make a potentially costly decision, you consult with your accountant and industry experts.
Ken Schmidt is the owner of Steel in the Air, a cell tower consulting firm. Steel in the Air provides expert consultations on cell tower valuation, cell tower lease negotiations, lease buyouts, lease renegotiations and lease buyouts. Ken has been quoted on cell towers in the NY Times and numerous other publications.