…their merger is approved by the federal government. This represents about 87% of all of the MetroPCS sites, excluding the DAS nodes. MetroPCS estimates that this will save them…really, T-Mobile…about $7B in site lease costs.
Doing some back-of-the-napkin calculations based on a 25 year average term, a $7B savings would work out to average blended going forward monthly rent of $2,333. Over a 30 years term, monthly rent drops out to about $1,944, blended. Frankly, this that sounds high to me, but perhaps my napkin is a bit wet.
MetroPCS’s announcement also alludes to an interesting technology conclusion: T-Mobile is satisfied with the bulk of its existing coverage from its existing sites. It must believe that it can take MetroPCS’s bandwidth and redeploy it from T-Mobile’s existing sites, most likely using upgraded base transceiver/telecommunications station (“BTS”) cabinets. For the non-technical of you reading this, this means that the MetroPCS acquisition is a bandwidth/capacity play; not a coverage play.
Without the passage of Section 6409(a), this pending deal might not have happened. We’ll see how the constitutional challenges to Section 6409(a) impact this deal.
MetroPCS’s announcement is yet another cautionary tale to potential wireless site landlords…
Wireless site landlords are most often bound to lease for 25 to 30 years with few, if any, real ‘outs.’ Conversely, the typical tenant ‘outs’ in a lease make their side of the deal really only a 30 day guarantee (if you’re lucky you might get 6 months).
For those of you who are considering entering into new leases, you are best served to carefully evaluate whether a 30 year v. 30 day commitment makes real sense. If not, then keep negotiating. If you are a wireless site landlord with a tenant requesting a renewal, extension, or modification, this is the time to negotiate a meaningful termination clause. This is what we tell our clients, and what we do for our clients.
We also tell our clients, ‘Sometimes the best deal is the one you walk away from.’
Food for thought on this Thanksgiving.
-Jonathan
