Feature Article

March 08, 2012

Frustrated Sprint Planning to Walk Away from LightSquared Deal: Report

Sprint is heavily considering walking away from its network-sharing agreement with LightSquared due to the wireless startup's inability to gain to regulatory approval for its half-built mobile broadband network, two sources close to the situation told Bloomberg.

The move, expected as soon as next week, would cap off a rough 9-month stretch for billionaire Philip Falcone's venture, which inked a 11-year deal with Sprint back in July 2011 but has suffered a serious of setbacks ever since.

LightSquared's troubles actually began last summer, before the deal was made with Sprint, when the Federal Communication Commission (FCC) found that its proposed network would interfere with GPS receivers and flight control systems, leading many device makers, government agencies and consumer interest groups to protest the move.

The startup was given several deadlines to fix its network – and tried several remedies, including using a lower spectrum band from satellite firm Inmarsat – but has been unable to garner approval from the FCC.

The most recent judgment was handed out last month, when the National Telecommunications and Information Administration told the FCC that “there are no mitigation strategies that both solve the interference issues and provide LightSquared with an adequate commercial network deployment.”

Bloomberg also reported that LightSquared defaulted on a $56.3 million payment to Inmarsat last month, claiming the promised work had not been completed, and asked Nokia Siemens to stop work on its network all the way back in 2011. The difficult run was capped off late last month when CEO Sanjiv Ahuja abruptly resigned and LightSquared cut nearly half its staff.

Apparently sensing the writing on the wall, it seems like Sprint is ready to abandon its agreement with LightSquared and look to another source to help the carrier transition to 4G. Sprint will most likely look to invest further in its own planned next-gen network or broaden its relationship with Clearwire, a company in which it owns a significant stake.

As for LightSquared, Falcone told investors of his Harbinger Capital Partners hedge fund last month that the company was still exploring options to gain regulatory approval and push forward with the network. But that was with Sprint still a partner.

Edited by Jennifer Russell

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