It’s a fact that the demand for connectivity increases as more and more devices require a wireless connection. In the UK, there are at least 23,000 cell towers, which is undoubtedly a considerable number, though perhaps it doesn’t sound as staggering compared to the 300,000 built in the US in the past 20 years. However, it’s also true that companies can go bankrupt or are often bought by others. In the event of a merger between two wireless carriers, existing cell sites risk being decommissioned.
So, what happens to your lease with a wireless carrier if the company suddenly goes bankrupt?
What You Need To Know About Wireless Carrier Bankruptcy
There’s no sense in sugar coating it, carrier bankruptcy is a reality. If the wireless carrier we entered into a lease agreement with goes bankrupt, the rent we receive could be lost. Moreover, if carrier A buys bankrupt carrier B, there will no doubt be overlap in coverage which will result in the decommissioning of a considerable amount of cell towers.
In India, the telecom sector grew dramatically from the late 1990s to 2010, according to a report by the global management consulting firm ATKearney. The result was the installation of over 365,000 towers: undoubtedly an over-supply. New industry developments and regulations raised questions about the sustainability of independent tower businesses, and as some of the newer businesses made their exit, debt repayments and reduced cash flow pushed some tower companies to the brink of bankruptcy.
Are There Any Other Reasons Other Than Bankruptcy Why a Wireless Carrier Would End the Cell Tower Lease?
A wireless carrier doesn’t need to go bankrupt or risk bankruptcy to decommission a cell tower or rooftop antenna. Companies around the world often opt for tower sharing, as doing so allows operators to reduce costs considerably.
Mergers and partnerships between carriers become increasingly likely as telecom companies look for ways to cut down operating expenses and gain market share in an industry that is demanding more and more bandwidth. When these consolidations occur, your cell site may become obsolete and you are at risk of lease termination. What’s more, developments in technology also threaten the security of any given cell site: new delivery methods may replace traditional antennas, potentially offering more coverage and reducing the need for them.
One way to avoid the risk of lease termination is entering into an agreement with a third-party company that specializes in cell tower lease buyouts. In this scenario, you receive a considerable lump-sum payment in exchange for the right to receive the site rent from the wireless carriers moving forward. Once you receive the prepayment, you can invest it in anything you see fit and it’s yours to keep even in the event of the cell tower being decommissioned. Learn more about The Benefits of reinvesting a lump sum.