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Dirty Doings Alleged in Cell Tower Battle

DALLAS (CN) - A small cell tower company claims in Federal Court that $2.5 billion behemoth American Tower Corp. uses illegal tactics in negotiating with landowners for cell tower sites in the Dallas/Fort Worth area.

Both plaintiff TriStar Investors and defendant American Tower Corp. and its affiliates lease space on towers to wireless phone carriers.

Calling itself a "tiny competitor," Pittsburgh-based TriStar Investors accuses American Tower of misrepresentation, Lanham Act violations, unfair competition, business disparagement, tortious interference with contract, tortious interference with prospective business relations and breach of contract.

The privately held company says it has 600 tower locations nationwide while ATC has 40,000 tower locations worldwide.

"Rather than competing fairly and acquiring sites through superior offers, American Tower has systematically misinformed and deceived landowners to acquire sites under less favorable economic terms than those offered by TriStar, to the material detriment of TriStar and landowners nationwide," Tristar says in its complaint.

"American Tower is not a wireless carrier and does not provide any wireless services," the complaint states. "It leases or subleases space on towers to wireless carriers. The vast majority of these towers are on land leased from various landowners. American Tower's financial motivation for any given site is relatively simple: pay the landowner as little rent as possible and charge the wireless carriers as much as possible. Whatever is left between the two, minus some small operating expenses, is profit. Historically, American Tower and the other tower companies have faced little competition in retaining sites, leaving uninformed landowners with no true options but to extend their lease on whatever terms the tower company would offer. As carrier rents have continued to escalate, a typical landowner has seen the ratio of the cash flow from a tower on his or her land fall from approximately 40 percent to

less than 15 percent."

TriStar, which has about 40 employees, says it has acquired more than 600 tower locations since was founded in 2005. It claims to have "brought true competition to the cell tower industry. ... In a typical transaction, a landowner who consummates a deal with TriStar will vastly improve his or her current financial arrangement. TriStar conservatively calculates that the landowners that have consummated deals with TriStar will collectively enjoy an increase in compensation over the next thirty years of approximately $340,000,000 over the amount they would have received if they had just extended their leases under their current lease terms. This increased compensation has a present value of approximately $104,000,000."

TriStar claims that it also reduces costs for wireless phone carriers, such as AT&T, Verizon and Sprint/Nextel.

TriStar accuses American Tower of using illegal tactics to eliminate TriStar as a competitor.

"American Tower repeatedly has told landowners that if they sign a deal with TriStar instead of extending their leases with American Tower, American Tower will tear down the tower on the land and that, therefore, the landowner would lose its income stream from the site," the complaint states. "Upon information and belief, based on TriStar's communications with these landowners and based on documentary correspondence obtained by TriStar, American Tower has made these statements to many of the landowners with whom TriStar has begun negotiations. But these statements are demonstrably false and misleading because American Tower knows that it does not, in the vast majority of cases, have any legal right to tear down towers at the expiration of its ground leases for several reasons."


First, TriStar says, significant number of the towers that American Tower manages in Texas are owned by AT&T.

Second, it claims, where American Tower has a ground lease and a purchase option, American Tower stated in recent 10Q filings with the SEC that it has not decided whether it will exercise its purchase option for any towers.

Third, TriStar says, many of the remaining towers are owned by Verizon and do not have purchase options.

And fourth, American Tower cannot tear down the towers that it does own because the wireless carrier tenants have a contractual right to maintain equipment on the towers, and their cellular networks depend on the specific sites, according to the complaint.

Nonetheless, TriStar says, American Tower continues to make these false threats to local landowners.

In one case, TriStar says, it was negotiating with a landowner in Tarrant County in 2010 to acquire rights to land on which an American Tower-managed site stood. TriStar claims American tower offered to extend the ground lease on far less favorable terms and threatened to tear down the tower if the landowner did not extend his lease, despite an AT&T sublease on it. So the landowner declined TriStar's favorable offer and extended his ground lease with American Tower, the complaint states.

TriStar claims another landowner, Leon Pelzel, owned a tower that had an AT&T sublease in place and faced received same threat of tower removal by American Tower. TriStar claims that Pelzel signed with TriStar, but had to devote additional time and money to close the transaction.

"As a direct result of American Tower's false statements, TriStar also had to put up a letter of credit that Mr. Pelzel could cash in if TriStar was not able to convert the tower due to it being torn down," the complaint states. "Contrary to American Tower's false statements to Mr. Pelzel, TriStar ultimately followed through with its promise to convert the tower and operate it in a manner that is profitable to Mr. Pelzel."

In a third case, TriStar says, it offered Karl Willock $100,000 for his tower site, but had to increase the offer to $136,000 to overcome American Tower's misrepresentations and threats.

TriStar claims that American Tower continues to make false statements and threats about its ability to tear down towers that are subject to AT&T subleases. It claims that American Tower continues to disparage TriStar to landowners, falsely claiming that TriStar does not have the ability to convert and operate their towers.

TriStar claims it has to spend "significant amounts of time and money" to combat American Tower's false advertising.

TriStar also claims that American Tower has threatened landowners with false statements about its ability to relocate wireless carrier tenants to other towers, rending their towers worthless.

TriStar says one such landowner was St. John's Lutheran Church in Tarrant County, which was threatened last year.

TriStar claims American Tower also falsely tells landowners that TriStar is going out of business and is unable to meet its financial obligations.

"American Tower also has specifically stated that TriStar never intends to convert or operate towers that it acquired and/or that TriStar lacks the financial means or expertise necessary to operate the towers. Each of these statements is false," the complaint states. "TriStar is financially stable and able to meet all of its obligations, has honored all of its contractual agreements, and is owned and managed by principals with extensive experience in operating and managing tower sites."

Tristar seeks a permanent injunction and actual, consequential and exemplary damages.

It is represented by William D. Sims Jr. with Vinson Elkins of Dallas.

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