Nextel Shutdown Continues
Sprint Nextel is continuing to shutter its iDEN network by terminating leases one-by-one as part of its Network Vision program. We have been following this project and representing landlords since last July and have reported here some thoughts and observations. This is the latest update.
Sprint recently reported that is behind on its Network Vision program. Its been our first hand experience that it is also behind on the decommissioning process. The primary reason for this is the approach taken by Sprint's vendors seeking to partially decommission sites by removing the Nextel radios and batteries only. Vendors are pitching this as a huge benefit to landlords who can attract new cell site tenants with a "plug-and-play" site. In reality, a new tenant only benefits by the presence of an existing permit. The left behind Nextel gear is mostly useless and obsolete. What's more, Sprint is presenting the partial decommission as part of an agreement whereby the landlord grants Sprint a full general release of liability for the equipment and structures left behind. This opens landlords to potential liabiltiy and risk years later if the site falls into disrepair or must be removed. Sprint's vendor goes even further by offering to work with the landlord to bring new tenants in exchange for a split of the future rent. Just how many sites the vendor is able to replace with new tenants remains to be seen. We have yet to see any.
In several cases Sprint terminates the lease unilaterally but fails to timely remove the site. This confirms they are behind in taking sites down. Sprint refuses to continue paying rent and takes the position that it has time following termination to fully remove the site.
We recently have worked directly with Sprint's management and legal teams on specific transactions. Negotiations have taken place for the partial decommission of sites in exchange for cash consideration. However, Sprint is not willing to budge on the general release requirement. Their compensation offers are also insufficient in many cases and do not take into consideration the details of each lease and site.
The Nextel decommission process places landlords in a difficult position. Sprint is leaving landlords with no favorable outcome, especially if they stay beyond lease termination. Landlords are forced to choose the lesser evil or best bad solution.
Posted by Mike Ritter