December 21, 2011
LightSquared Wants Quick Decision, Sprint Deal Might Hinge on it
There is probably a very-compelling reason that LightSquared has asked the Federal Communications Commission to quickly approve its request to use former satellite frequencies for terrestrial mobile wireless use.
It appears LightSuared is bumping up against a previously agreed upon deadline that has LightSquared paying Sprint $9 billion to get access to the Sprint nationwide network.
LightSquared in July 2011 had struck a 15-year deal with Sprint Nextel (News - Alert) Corp. to share network expansion costs. As part of that agreement, LightSquared agreed to pay Sprint to build and operate a nationwide Long Term Evolution network.LightSquared was to pay Sprint $9 billion in cash and service credits valued at about $4.5 billion.
The deal would allow LightSquared to sell Sprint's LTE network and roam on its 3G network, saving LightSquared about $13 billion over the next 15 years. Sprint, in turn, would be able to use LightSquared's capacity when needed.However, Sprint told LightSquared it had until the end of the year to receive FCC (News - Alert) approval to operate on the proposed networks that are supposedly interfering with global-positioning systems.
Failure to get such permission does not mean Sprint and LightSquared could not reach a deal later, but the terms might not be the same, especially now that Sprint has reconfirmed its support of Clearwire (News - Alert) by spending heavily in Clearwire in the latest round of investment. Clearwire raised US$734 million through a stock offering and a new investment by majority owner Sprint Nextel in early December 2011.
The new offering of Clearwire stock brought in $402.5 million, while Sprint exercised its pre-emptive right to buy 173.6 million more shares of Clearwire, injecting $331.4 million into the company as well. Clearwire still needs to raise more money to finish its LTE network, but some had thought Sprint would not reaffirm its support for Clearwire. Barring some unexpected new movement by the FCC, the original deal between Sprint and LightSquared will expire.
That deal apparently includes a requirement that LightSquared get FCC approval to use its spectrum before Sprint moves ahead with plans to become a wholesale customer of LightSquared. Of course, that is just part of the instability around LTE spectrum in the U.S. mobile market, with AT&T (News 
- Alert) failing in it bid to acquire T-Mobile USA, Dish Network asking for permission to use its own satellite spectrum in the way LightSquared proposes to do, Verizon Wireless acquiring spectrum from cable companies and T-Mobile USA still searching either for an exit from the U.S. market or some viable way to get its own LTE spectrum.
Gary Kim (News - Alert) is a contributing editor for TMCnet. To read more of Gary’s articles, please visit his columnist page.
Edited by Juliana Kenny
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