US terrestrial/satellite venture LightSquared has secured a US$586m loan with UBS and JPMorgan to help accelerate the roll out of its ground infrastructure.
The deal means LightSquared has raised more than US$2bn in debt and equity over the last seven…
US terrestrial/satellite venture LightSquared has secured a US$586m loan with UBS and JPMorgan to help accelerate the roll out of its ground infrastructure.
The deal means LightSquared has raised more than US$2bn in debt and equity over the last seven months, according to the company in a statement announcing the loan’s closure on 22 February.
“Our investors share our belief that now is the time for a wholesale model to succeed, as we will bring desperatelyneeded 4G capacity to businesses, consumers, government and public safety users through a wide variety of retail partners which will sell services based on our integrated terrestrial and satellite network,” said CEO Sanjiv Ahuja.
Speaking to SatelliteFinance on the sidelines of the Mobile World Congress in Barcelona on 16 February, CMO Frank Boulben revealed the venture plans to accelerate its terrestrial deployment by more than a year.
This could mean the group’s network, which is being built by European vendor NSN, will be able to cover 260 million people in the US by 2014.
As part of conditions tied to the venture’s ATC licence, it must be capable of covering at least 100 million people in the US by 31 December 2012, at least 145 million people by the end of December the following year, and at least 260 million people by 31 December 2015.
Boulben also confirmed wholesale agreements with five customers: two carriers, a device manufacturer, a national retailer and a website.
LightSquared’s loan comes hot on the heels of a decision by hedge fund Harbinger Capital Partners, which owns LightSquared, to sell its remaining 14% stake in satellite operator Inmarsat for £431m. Although Harbinger is widely expected to use the cash on its satellite/terrestrial project, it could also be used to fund the hedge fund’s battle to control beleaguered operator Terrestar Networks, which is currently in Chapter 11 bankruptcy protection. Meanwhile, US WiMAX wholesale rival Clearwire has revealed it is seeking additional funding for “significant” network expansion in the near term.
In a statement accompanying 4Q results on 17 February, the company stated: “Clearwire continues to seek additional funding to continue its network development by looking at a number of funding and other strategic alternatives, including potential strategic transactions, additional debt or equity financings and/or asset sales.” Clearwire added that a process initiated in H2 2010 to seek bids for the potential sale of excess spectrum had received interest from multiple parties, “some of whom also expressed interest in exploring other strategic transactions with the company”.
The telco expects to officially announce the conclusion of these negotiations in the second quarter of this year.
First satellite completes testing
LightSquared’s loan comes just days after the group announced the successful post launch testing and acceptance of its first satellite, Sky Terra 1, from satellite contractor Boeing.
A technical fault had initially prevented Sky Terra 1 from fully extending its 22 metre L-band antenna after the bird’s launch on 14 November last year. However, after a team of experts were assembled by Boeing and antenna maker Harris, the issue was finally resolved on 14 December when it was able to resume full operations.
But it’s still not all clear sailing for the venture. Satellite operator Inmarsat and some Federal agencies, including the Department of Defense, have expressed concerns that LightSquared’s terrestrial network could cause GPS and GNSS interference.
These concerns were officially raised by the National Telecommunications and Information Administration on 12 January, prompting LightSquared to commit up to US$20m to research ways to remove any potential problem.
Boulben said he was “confidently positive” the interference concerns will be addressed satisfactorily. He added that LightSquared wants to get this right as most of its customers will use GPS capable devices and that the company is engaged in active cooperation with all parties involved and is reporting to the FCC on a monthly basis.
FCC ruling paves way for terrestrial-only LightSquared
The interference concerns arose after the FCC granted the venture a waiver to rules governing its ATC licence, enabling its wholesalers to offer terrestrial-only services.
LightSquared filed a request to the regulator on 18 November to adjust conditions that required the licence to be used in conjunction with a fully integrated satellite/terrestrial network.
Although in announcing its decision on 26 January the FCC
ordered LightSquared to ensure it addresses interference concerns, it reasoned that “in the absence of a waiver, the substantial public benefit of rationalising MSS L-band spectrum operators might not be realised any time soon”. In a statement circulated to media outlets following the announcement, LightSquared pledged a “diligent effort to work with all interested parties in an open and comprehensive process to address those concerns”.
The waiver will likely fuel the anger of some industry observers, who have already accused the FCC of double standards over a deadline extension last year that enabled the launch of LightSquared’s first satellite, given that ATC licence holder Globalstar and its partner Open Range have been denied similar regulatory adjustments in the past.
It remained unclear at the time of going to press whether the FCC intended to grant a similar waiver to other ATC licensees.
In related news, LightSquared has announced the triggering of a spectrum leasing agreement with Inmarsat.
The move follows an agreement (Phase 1) last year to increase the contiguous L-band spectrum of both parties, and will see the mobile satellite operator lease LightSquared some of its spectrum at an annual cost of US$115m, which will increase at a rate of 3% per year.
For Phase 1, LightSquared is currently making a series of payments to Inmarsat that total US$337.5m.
“We are pleased to report that LightSquared is experiencing very strong demand for capacity on its 4G-LTE wholesale network, and therefore we have decided to accelerate the triggering of Phase 2 of our agreement with Inmarsat,” said LightSquared chairman and CEO Sanjiv Ahuja.
“When Phase 2 is fully executed, LightSquared will have the use of up to 59 MHz of terrestrial and L-Band ATC spectrum over the continental United States and Canada to operate its nationwide integrated 4G-LTE and satellite network.
“LightSquared will work diligently and cooperatively with Inmarsat and its user community to coordinate implementation of all phases of this agreement to insure a seamless transition.”
