The Court of Appeal has recently ruled on an important dispute under the Electronic Communications Code in AP Wireless II (UK) Limited v On Tower UK Limited (Cathcart) [2025]. The decision clarifies whether a telecoms site agreement with an indefinite rolling term creates a lease or merely a licence.
This ruling matters for property owners and landlords hosting telecoms equipment, as it affects renewal rights and how rents are assessed. In this newsletter, we explain the background of the case, the Court’s decision, the impact on property owners, and what it means for future agreements.
Background to the dispute
The case involved a mast site originally agreed in the late 1990s. The agreement had a 10-year minimum term, after which either party could terminate on 12 months’ notice. The question was whether, after the 10 years, the arrangement was a lease (entitling the owner to a 1954 Act renewal and open-market rent) or a licence (falling under the Code with operator-friendly valuation).
What the Court of Appeal decided
The Court held the agreement was not a lease because it lacked a fixed end date. A valid lease requires a certain term, but here the arrangement could continue indefinitely once the minimum period expired. Despite granting exclusive possession and rent obligations, the agreement only created a contractual licence.
The Court also refused to imply a periodic tenancy to “save” the lease, emphasising that the lack of certainty was decisive. The practical result was that the operator could rely on Code renewal rights rather than a lease renewal under the 1954 Act.
Implications for property owners
The outcome of the case has significant consequences:
- Existing agreements: Contracts with rolling or indefinite terms may not be leases, regardless of how they are labelled. Owners may therefore have fewer rights than expected.
- Renewals: A licence means renewal takes place under the Code, not the 1954 Act. Rents are then assessed using the Code’s “no-network” assumption, often much lower than market levels.
- Negotiations: Operators are likely to rely on this case to push for Code-based valuations. Owners should review their agreements carefully before entering renewal discussions.
- Future drafting: To avoid uncertainty, new agreements should specify a clear lease term (for example, 10 or 20 years) rather than open-ended rolling rights.
Code rights and valuation under the 2017 reforms
The 2017 Code already shifted valuation strongly in favour of operators. Where an agreement is a lease, the first renewal may still fall under the 1954 Act, with higher open-market rents. But where it is a licence, the Code applies, reducing site payments.
The Cathcart decision confirms that many rolling-term agreements will be treated as licences, pushing more renewals into the Code regime. Future legislative changes will bring greater alignment, but for now, the classification can significantly affect revenues.
How 3CS can help
Telecoms site agreements can have major financial implications. At 3CS, we help property owners and landlords review, negotiate, and renew agreements under the Electronic Communications Code. Whether you need to confirm if your contract is a lease or licence, or require support in negotiations with operators, our team can support you. Contact us today for clear, practical advice.
