Telco sites are typically built on land and buildings within the ownership of another party and are often used by a number of carriers. Therefore, lease agreements exist between carriers and the landowner permitting equipment to be placed on premises. The carrier benefits by being able to provide radio coverage from the telco site without owning the land whilst the owner benefits from receiving rent documented within the lease agreement.
A telecom tower lease prepayment is simply a lump-sum payment given to the property owner in exchange for the right to receive the telco site rent from the carrier moving forward. It does not in any way affect the ownership of the property or the rights that the carrier has in the lease agreement.
Much like a real-estate transaction, the specific terms of a lease prepayment are captured in a contract that is recorded with the local land titles office. This ensures that even if the property changes hands or if the mobile carrier decides to terminate their lease agreement(s) and decommission the telecom tower in the future, everyone’s rights are protected.
While location is a one of the considerations in determining the amount of the telecom tower lease prepayment, there are numerous variables and risk factors involved. The terms in the lease agreement, prevailing interest rates, the carrier(s) on the property, the time value of money, and of course the rent, are just some of the many aspects considered when placing a value on the potential future rent of a telco site lease.