The Court of Appeal has clarified the legal status of a telecoms site agreement that will have wide-ranging implications for the sector given that many similar agreements will exist between operators and site providers.
The decision will affect how site providers and operators approach renewals, rent negotiations, termination and statutory protections under the Landlord and Tenant Act 1954 (“1954 Act”) and the Electronic Communications Code (“ECC”).
The effect of the Court’s decision that, due to the uncertainty of the term/duration, the agreement was not treated as a tenancy but instead treated as a licence, will benefit operators because of the lower rents payable under a licence renewed under the ECC, compared to the generally higher rents payable under a tenancy of a mast site renewed under the 1954 Act.
The decision will also likely result in more existing agreements being terminated under the ECC rather than the 1954 Act and therefore subject to the longer ECC 18 months’ notice period compared to the shorter notice periods (as short as 6 months) under the 1954 Act.
Background
The dispute arose from a 1997 agreement for the installation and maintenance of telecoms equipment on farmland in Cheshire.
The agreement, originally between the landowner and Orange, allowed the operator to install a phone mast for a minimum of ten years, with either party able to terminate after that period by giving not less than twelve months’ notice. Both the current owner (AP Wireless) and the current operator (On Tower) were successors to the original parties.
The owner argued that the agreement created a tenancy and was therefore renewable under the 1954 Act. If right, this would likely result in a higher rent than that payable if renewed as a licence under the ECC.
The operator contended that the agreement was not a valid tenancy, but a contractual licence, and was to be renewed using the process under the ECC.
Key issues for the court
The key points that the Court determined were:
- Did the agreement itself create a valid tenancy with a certain term?
- If not, should the Court infer a periodic tenancy?
- If neither, should the agreement be treated as a contractual licence?
The Court’s Decision
1. No valid tenancy because of an uncertain term
The Court held that the agreement did not create a valid tenancy. Although it provided for a minimum term of ten years, it allowed either party to terminate at any time after that with not less than twelve months’ notice.
This meant that the maximum duration of the agreement could not be known at the outset of the agreement, making its term uncertain. The Court followed established law that a tenancy must have a certain maximum duration from commencement. The Court confirmed that any agreement where the end date cannot be ascertained at the outset is void as a tenancy.
2. No inferred periodic tenancy
The owner argued that, if the fixed term was void, the Court should infer a periodic tenancy (such as a yearly tenancy) based on the payment of rent and exclusive possession.
The Court rejected this argument, finding that even though the operator had been given exclusive possession of the premises in question, the agreement’s express terms were unambiguous and inconsistent with a periodic tenancy.
3. Agreement is a contractual licence
The Court concluded that, once it has determined that a tenancy would be void because there is an uncertain term/duration, the Court is faced with the choice of inferring a tenancy or giving effect to the parties’ intentions contractually and, in doing so, the Court has to apply an objective analysis of what the parties would have intended to do.
In this case, the Court determined that the “best fit” for the parties’ intentions was a contractual licence, as it was consistent with almost all of the terms that the parties had agreed at the outset of the agreement.
The Court also noted that, whilst the outcome might seem unsatisfactory to some, it was underpinned by established legal principles.
Comment and practical steps
This Court of Appeal decision is significant for landowners/site providers and telecoms operators alike.
Many existing site agreements use similar wording for the “term” to that used in this case (i.e. where at the outset of the agreement there is an uncertainty as to the agreement’s duration/ length of the term) and this ruling confirms that such agreements are now highly likely to be treated as licences and not tenancies.
Whilst the Court left the door marginally ajar for an appeal to the Supreme Court, in the meantime (and unless any such appeal is made, which remains to be seen) this decision is likely to encourage operators, where the agreement is a licence and not a tenancy, to push for renewal under the ECC rather than the 1954 Act, given that (a) the rents/fees that can be achieved by site providers under the ECC are likely to be significantly lower and (b) the ability to resist any such renewal will also be weakened.
It should be noted that when Part 2 of the Product Security and Telecommunications Infrastructure Act 2022 comes into force (date not yet known), it will harmonise the rental calculation provisions between the ECC and the 1954 Act, incorporating the ‘no network’ valuation of Code agreements into the 1954 Act.
This Court decision is also likely to embolden operators to resist attempts by site providers to terminate agreements using the 1954 Act, instead enabling operators to rely on the more “operator friendly” ECC provisions in such situations.
Site providers should therefore review their existing site agreements to assess whether they are likely to be treated as licences or tenancies and to factor this in when considering whether or not to terminate any such agreements and more generally in relation to renewals of such agreements.
The court’s decision is not specifying new law, but in applying existing legal principles it provides greater certainty on how telecoms agreements with an uncertain term will be treated in the future.
Here is a link to the decision AP Wireless II (UK) Ltd v On Tower (UK) Ltd [2025] EWCA Civ 971 (25 July 2025).
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