Hedge fund Harbinger Capital Partners’ ambitious plan to create a nationwide satellite/terrestrial 4G-LTE wireless broadband network in the United States has taken a significant step forward after it signed a US$7bn eight-year contract with Nokia Siemens…
Hedge fund Harbinger Capital Partners’ ambitious plan to create a nationwide satellite/terrestrial 4G-LTE wireless broadband network in the United States has taken a significant step forward after it signed a US$7bn eight-year contract with Nokia Siemens Networks to deploy, install, operate and maintain the next generation network.
As part of the announcement, the hedge fund also revealed a new name for the venture, LightSquared.
Under the terms of the contract, which remains subject to final approval by the boards of both parties, Nokia Siemens will roll out a network of 40,000 base stations covering 92% of the US population by 2015.
The deal should assuage industry and investor concerns over the aggressive build-out schedule that Harbinger committed to in order to secure Federal Communications Commission approval for its plan. LightSquared needs to provide coverage in the United States to at least 100 million people by
December 31, 2012, at least 145 million people by December 31, 2013, and at least 260 million people by December 31, 2015. The service will begin in two trial markets, Denver and Phoenix, with a commercial launch commencing before the third quarter of 2011.
Once complete, LightSquared plans to wholesale capacity on the network to the nation’s mobile operators. LightSquared’s director of corporate communications, Tom Surface, told SatelliteFinance that the new company is currently in negotiations with around 30 potential parties over such a deal and is in advanced talks with around a dozen of them. The companies come from a number of different market segments including retail, content providers, device manufacturers, carriers and internet providers. He added that these discussions have been ongoing for the past nine months.
Among the firms thought to be holding talks are T-mobile and Google, although the FCC has banned the country’s two biggest wireless carriers, Verizon Wireless and AT&T, from being able to lease any capacity. Harbinger, which owns stakes in both Leap Wireless and Sprint Nextel Corp, previously stated that by 2015 it expected LightSquared to serve more than 40 million connected consumer terrestrial devices on a wholesale basis.
In order to fund the network, Harbinger revealed that LightSquared has secured debt and equity financing of approximately US$1.75bn. While the company would not comment on the fund raising, Surface said that the money was available to draw down immediately.
BoA Merrill Lynch and UBS have been advising LightSquared on its financing options, while Milbank, Tweed, Hadley & McCloy LLP; Weil, Gotshal & Manges and Goldberg, Godles, Wiener & Wright are providing legal advice. Boutique management consulting group Altman Vilandrie & Company also provided advice.
Harbinger has already contributed US$2.9bn of assets to the project, including the nascent mobile satellite services operator SkyTerra that Harbinger bought out for US$262.5m earlier this year.
SkyTerra is integral to Harbinger’s plans as it holds 10MHz of L-band spectrum through its ATC (Ancillary Terrestrial Component) licence. This spectrum enables LightSquared to provide satellite communications services in areas outside of the terrestrial network. More importantly, by taking over SkyTerra and with its ATC operating licence, Harbinger secured initial approval from the FCC for its nationwide satellite/terrestrial network plan.
In all LightSquared controls 59MHz of auctioned and non-auctioned satellite and terrestrial spectrum, including approximately 16MHz of the SkyTerra spectrum, 8MHz of 1.4GHz terrestrial spectrum that is held and being leased from Terrestar (in which Harbinger owns approximately 49.32%) and 5MHz of 1.6GHz terrestrial spectrum which it is leasing from Crown Castle. It has also entered into a cooperation agreement with Inmarsat for its L-band spectrum that will enable it to access an additional 30MHz of ATC spectrum by 2013.
Skyterra-1 launched delayed
LightSquared has revealed that the launch of SkyTerra-1, the first of the two satellites that will make up the majority of the satellite component of the next generation network, has been postponed after the spacecraft’s manufacturer Boeing revealed a technical issue.
LightSquared stated: “We were notified by Boeing of an industry quality issue to a unit on the satellite that would delay the delivery of the satellite and the shipping of the SkyTerra-1 satellite to Baikonur. The specific issue is not being disclosed.
“Based on estimated delivery information from Boeing and available launch slots by our launch services provider, International Launch Services, we expect the revised launch for SkyTerra 1 would likely move to December 2010 or early in the first quarter of 2011. Confirmation of the expected launch dates of the satellites remain under review with Boeing and ILS.
“Service planning for our next-generation network continues on schedule. SkyTerra services will continue to be provided by our two current generation satellites already in orbit and operational, with no impact on our ongoing services.”
SkyTerra-1, which features a 22-meter diameter, elliptical mesh L-band reflector, was originally scheduled to launch in mid-August 2010. It will be located at 101.3W with SkyTerra-2, which is due to be launched between Q4 2010 and Q1 2011, to be located at 107.3W.
