EE Limited v AP Wireless II (UK) Limited

On renewal of an agreement under the Electronic Communications Code, a redevelopment break clause may be appropriate even where redevelopment is for a telecommunications use. The clause should balance the operator’s need for security with the site provider’s genuine opportunity to redevelop, while ensuring the least possible loss and damage under Communications Act 2003.

Consideration under paragraph 24 must disregard the value of use for an electronic communications network, but not the physical condition of the site or the real burdens of the rights granted. Properly adjusted evidence of comparable non-telecommunications lettings may assist the valuation. The Tribunal may depart from earlier guideline figures where reliable evidence justifies it.

EE Limited and Hutchison 3G UK Limited sought renewal under Part 5 of the Electronic Communications Code of their lease of a rural greenfield telecommunications site at Vache Farm. The previous contractual term had expired in May 2020, but the operators’ rights continued under the Code.

The parties agreed a ten-year term, an operator break after five years and an RPI review. They disputed the landlord’s proposed redevelopment break right, an additional termination ground based on paragraph 21 of the Code, an indemnity, and the annual consideration under paragraph 24.

The central issues were the appropriate limits of a redevelopment break clause and the rent for an unexceptional rural mast site under the no-network assumption.

1. The Tribunal determined the outstanding terms of the new lease. The landlord may terminate on at least 18 months’ notice expiring on the fifth or a later anniversary of the term commencement date, if it intends to redevelop all or part of the site and cannot reasonably do so while the lease continues.

2. A redevelopment break is not confined to non-telecommunications redevelopment. The Code does not prevent genuine redevelopment merely because the replacement mast may be owned or managed by the site provider or an associated company. The appropriate balance was a five-year period of secure occupation, followed by a redevelopment opportunity. The landlord’s intention is to be tested at the hearing, consistently with paragraph 31(4)(c), rather than by an earlier contractual test.

3. The proposed additional break ground based on paragraph 21 was rejected. Although an expired code agreement may be brought to an end on that ground, no evidence explained when that ground might arise during the contractual term. The Tribunal limited early termination to redevelopment to avoid creating unnecessary opportunities for dispute. It also omitted the proposed specific indemnity because its effect was unclear and the agreed general indemnity appeared sufficient.

4. For paragraph 24, the no-network assumption excludes the value generated by the operator’s network use. It does not alter the site’s physical condition or remove the burdens which the granted rights would impose on the hypothetical landlord. Electricity and fibre were therefore assumed to remain available at the site boundary.

5. The former guideline figure of £750 for an unexceptional rural site was too low in light of inflation and adjusted evidence of small non-telecommunications lettings. That evidence could be used only after removing value attributable to the tenant’s particular use; no upward size adjustment was justified. Taking account of the greater access, upgrade, adjoining-land and security-of-tenure burdens, the Tribunal fixed annual consideration at £1,750.

not stated in the judgment.