Question
June 28, 2005
BY COURIER
Michael Verne
Premerger Notification Office
Federal Trade Commission
Room H-314
600 Pennsylvania Avenue, N.W.
Washington, DC 20580
Re: Exemption Applicable to the Acquisition of Communications TowersPursuant to Section 802.5
Dear Mike:
Thisletter confirms our telephone conversation on June 22, 2005 regarding the applicability of the exemption set out in Section802.5, the acquisition of investment rental property assets, to the acquisitionof communications towers and related real property. As we discussed, Company A,the acquiring person, currently owns and manages a number of communicationstowers. Company A is engaged primarily in the business of leasing access to itstowers to unrelated third parties - primarily wireless communications providers.These unrelated third parties lease space as tenants on Company A's towers forthe purpose of installing equipment to facilitate wireless communications,including cellular, paging, and wireless e-mail and data transmission.Reference to a lease is to a lease, license or substantially similar economicarrangement.
CompanyA is not a vertically integrated wireless communications provider.Substantially all of the space on the towers that can be used to mountcommunications equipment is leased or available for lease to third parties. CompanyB, the acquired entity, also is engaged primarily in the business of leasingaccess to its towers to unrelated third parties. Company A will purchase fromCompany B a number of communications towers and the related real property onwhich the towers are situated. Company A will acquire these assets from CompanyB with the intent to continue to manage the towers and lease the space on thetowers to unrelated third parties.
Rule802.5 exempts acquisitions of investment rental property assets which"will not be rented to entities included within the acquiring personexcept for the sole purpose of maintaining, managing or supervising theoperation of the real property, and will be held strictly for rental or investmentpurposes." You advised that the 802.5 exemption applies to the portions ofthe communications towers that are not used by the parties for their own use orbusiness purposes. In this case, substantially all of the usable space on theCompany A and Company B towers is either rented or available for rent tounrelated third parties. Furthermore, Company A intends to continue leasing thespace on Company's B's towers to unrelated third parties after the transactioncloses. You confirmed that the value of the tower assets, and related real estate,that is either rented or held available for rent to unrelated third parties isexempt under Section 802.5. Company A has confirmed that after exempting thevalue of those assets the total value of the transaction falls far below $53.1million. Thus, the transaction is not reportable under the HSR Act.
Thankyou very much for your assistance with this matter. Please contact me as soonas possible in the event that your understanding of our telephone discussionvaries in any way from mine.