How will IFRS 16 affect the tower industry?
What will be the effect of the new international lease accounting standard IFRS 16 Leases on tower carve outs and sale and leaseback deals?
With effect from 1 January 2019, new international lease accounting rules will remove the distinction between finance leases and operating leases, requiring conventional tower leases to be brought on to MNO balance sheets. At first glance, this appears to compromise the sale and leaseback of towers as an option for MNOs seeking to delever, but the tower industry believes it has devised a work-around: the Master Service Agreement. Will it work? And will IFRS 16 Leases prompt more MNOs to carve out rather sell and leaseback their towers? TowerXchange spoke to two of the leading investment bankers, who have advised on multiple tower transactions in Europe and worldwide, to explore the implications.