How a mobile carrier’s request for a reduction in rent led to an increase in income for the landlord.
When an Australian road authority client was put under pressure from a mobile carrier to lower rents, siteXcell stepped in to take a closer look and turn things around.
Property owners often feel at a disadvantage when dealing with telecommunications carriers.
Navigating and negotiating highly technical long-term contracts requires specialist knowledge. That’s why, when telcos put the squeeze on for a better deal, it’s not unusual for landlords to feel out of their depth.
Recently a mobile carrier approached our client, an Australian road authority organisation, to request a reduction in rent on an existing contract. The road authority was rightly suspicious and knew not to accept the request at face value.
Before starting fresh negotiations over a reduction in rent, our client wanted to know if the carrier was meeting its current obligations.
Our client commissioned siteXcell to review the existing deal, and as an independent telecommunications consultancy, we were well-positioned to offer an objective assessment.
Our process involved reviewing the road authority’s tenure documents, auditing the tenure register and analysing the pricing schedule.
We then took a forensic look at the documentation to ensure the carrier was complying with the terms and conditions governing their on-site presence.
Next, we overlayed the information provided by the client to our database of mobile sites and incorporated Google Street view photos of each installation.
Our findings were extraordinary:
- The carrier had failed to provide structural engineering certificates for the client’s infrastructure
- The carrier had violated the terms of their tenure by sharing the site with another carrier
- Approximately 35% of the carrier’s sites violated their tenure arrangements with the client
- The carrier had three additional unreported installations on the client’s land.
In summary, not only was the carrier’s request for a rent reduction unjustified, but there were now serious questions for the carrier to answer in terms of meeting its existing commitment to our client.
A successful outcome
The review process clearly outlined where the carrier had failed to live up to its obligations. The road authority had grounds for considerable redress in terms of past, current, and ongoing access to its property portfolio.
Subsequently, our client presented the mobile carrier with a claim for more than half a million dollars in back rent.
The carrier was also advised that ongoing rentals for shared sites, including those previously undisclosed, would add $400,000 to their annual bill.
siteXcell’s objective external process had effectively turned the application for a rent reduction on its head. Our client was no longer under pressure and could confidently approach the carrier with a clear set of requirements for continued access to its sites.
“We’re delighted we engaged siteXcell to undertake the review. Their strong industry background and their ability to provide sound strategic advice ensured a successful outcome. siteXcell’s detailed report established there was no justification for the rent reduction request. On top of that they discovered we were being significantly underpaid in the first place. Thanks to siteXcell, we were able to settle the matter to our satisfaction, an outcome we never expected.“