Satellite

Sprint, LightSquared Ink 15-Year Deal

8/01/2011 12:01 AM Eastern

Sprint Nextel has struck
a 15-year deal with LightSquared,
which is building an integrated 4G
LTE wireless broadband and satellite
network, for spectrum hosting and
network services under which Light-
Squared will pay Sprint $9 billion and offer credits valued
at $4.5 billion over the first 11 years.

LightSquared will pay Sprint to build and operate a nationwide
Long-Term Evolution network that hosts L-Band
spectrum licensed to or available to LightSquared. In turn,
LightSquared can sell its 4G broadband capacity produced
through this spectrum hosting relationship to Sprint, other
wireless carriers and retail partners.

The companies said last week the agreement is subject to
LightSquared’s obtaining resolution and approval from the
Federal Communications Commission of certain interference
issues involving terrestrial use of the L-Band spectrum.

The Federal Aviation Administration released a study
last Wednesday that found LightSquared’s LTE network
would introduce signifi cant GPS interference — although
LightSquared has backed off that original plan.

Analysts expect LightSquared will face ongoing political
challenges to get its plan approved by the FCC. “[I]t is
now almost inconceivable that the FCC will approve the
LightSquared plan without another significant course of
interference testing, presumably followed by yet another
round of remediation proposals and replies,” Sanford
Bernstein senior analyst
Craig Moffett wrote in a
research note.

“We believe Light-
Squared, in cooperation
with the FCC and adjacent
spectrum users, is taking
proactive steps to address
and resolve these issues in
a timely manner,” Sprint
president of network operations
and wholesale Steve
Elfman said in a statement.

The network-sharing
agreement between Light-
Squared and Sprint “must
be viewed as speculative,
at best,” Moffett wrote.
Without LightSquared, he
said, Sprint’s 4G future “is
once again in Clearwire’s
hands ... and we believe Clearwire is Sprint’s, and Sprint’s
alone, to fund.”

Under the terms of the agreement between Sprint and
LightSquared, during an 11-year period, LightSquared
will make payments to Sprint of approximately $9 billion
in cash for spectrum hosting and network
services, as well as LTE and satellite purchase
credits worth about $4.5 billion.

Sprint has the option to buy up to 50% of
LightSquared’s expected L-Band 4G capacity
on a wholesale basis.

For LightSquared, the agreement is expected
to lower network capital and operating
expenses by more than $13 billion
over the next eight years, in comparison with the cost of a
standalone network build. LightSquared expects the deployment
of the nationwide LTE network to be completed
more than a year ahead of the FCC mandate to cover 260
million Americans by 2015.

Also under the agreement, LightSquared has a 3G nationwide
roaming agreement with Sprint. That will allow
LightSquared’s wholesale customers to be able to offer
combined 4G/3G data services as soon as LightSquared
launches its first 4G markets in 2012.

“This agreement gives LightSquared a rapid and costeffective
radio access network build,” LightSquared
chairman and CEO Sanjiv Ahuja said in a statement.
“With our next-generation satellite already operational
and our independent core network build underway,
LightSquared is now well positioned to meet the fastgrowing
market demand for wireless broadband services
with its wholesale-only integrated 4G-LTE and satellite
network.”
Reston, Va.-based LightSquared is owned by privateequity
firm Harbinger Capital Management, which is
headed by Philip Falcone.

AT A GLANCE: LIGHTSQUARED

Description: Wholesale broadband services provider building a
nationwide LTE network that uses satellite and terrestrial technologies.

Launch plan: First commercial launch slated for 2012; network
expected to cover at least 260 million Americans (92% of the U.S.
population) by 2014.

Funding: $2.9 billion of assets contributed by Harbinger Capital Partners,
headed by billionaire Philip Falcone; plus more than $2.3 billion in
debt and equity financing from UBS, JP Morgan and others.

Headquarters: Reston, Va.

SOURCE: Multichannel News research

September