Sprint Kills Its LightSquared Relationship, Returns $65 Million
Sprint has officially stepped away from the 15-year deal it signed with LightSquared in the summer of 2011. LightSquared was to be Sprint's partner in rolling out 4G Long-Term Evolution (LTE) services, but in a March 16 statement, citing contingencies related to possible interference issues related to LightSquared's spectrum, Sprint said it is acting on its right to terminate the agreement.
In addition, Sprint is returning $65 million in prepayments to LightSquared. The money was meant to cover costs incurred by Sprint, but whichwith the project hardly off the groundnever came to be.
Sprint has been and continues to be supportive of LightSquareds business plans and appreciates the companys efforts to find a resolution to the interference issues impacting its ability to offer service on the 1.6GHz spectrum," according to Sprints statement. We remain open to considering future spectrum hosting agreements with LightSquared, should they resolve these interference issues, as well as other interested spectrum holders.
The Wall Street Journal first reported that Sprint would split with LightSquared on March 15, although many believe the relationship had soured since the Federal Communications Commission ruling.
LightSquared, which is backed by billionaire Philip Falcone's Harbinger Capital Partners, sought to create an LTE network using spectrum dedicated to wireless satellite communication. The company made a number of adjustments to the network, but ultimately was unable to gain approval from the FCC, which found in testing that the network interfered with GPS signals.
In a Jan. 13 letter to the FCC, the National Space-based Positioning, Navigation and Timing Executive Committee said it found that LightSquared's LTE network interfered with GPS signals to a significant degree, and that the problem could not be corrected; therefore, no further testing was recommended.
In December, Bloomberg News leaked the results of government tests, likewise showing it capable of knocking out a "great majority" of GPS systems. LightSquared CEO Sanjiv Ahuja was quick to call such reports biased and said they are setting up LightSquared to fail. Following the Bloomberg report he quickly wrote to the Departments of Defense and Transportation, calling for investigations into the source of the leak.
Sprint, through all this, has been a patientperhaps, hopefulpartner. Sprint, which offers 4G over Clearwire's WiMax network, is anxious to get on the LTE bandwagon. It entered a 15-year agreement with LightSquared in July 2011 that guaranteed Sprint the opportunity to purchase up to 50 percent of LightSquared's L-Band LTE capacity. Anxious for things to proceed, in February, for a second time, Sprint extended the deadline by which LightSquared needed the FCC's approval and the deal could move on.
In a particularly notable, and most recent, setback for LightSquared, Ahuja, who has been a tireless defender of the network, announced his resignation Feb. 28.
Sprint said in its March 16 statement that, while regrettable, the termination of the agreement "will have no impact on Sprint's current customers and is not material to Sprint's ongoing business operations."
It added that its Network Vision projectits strategy for rolling out LTE and consolidating and streamlining spectrum and other assetsis on schedule and on budget.
"We look forward to begin launching our 4G LTE network mid-year," according to Sprint.