Mobile satellite operator Inmarsat and US satellite/terrestrial venture LightSquared have agreed to delay part of their spectrum leasing deal to 2014. LightSquared has also made a payment of US$56.25m to Inmarsat.
Inmarsat said that, as a result of…
Mobile satellite operator Inmarsat and US satellite/terrestrial venture LightSquared have agreed to delay part of their spectrum leasing deal to 2014. LightSquared has also made a payment of US$56.25m to Inmarsat.
Inmarsat said that, as a result of the deal, LightSquared would no longer be in default of any payments.
The US$56.25m marked the completion of phase 1 of an agreement between the companies, which involved the coordination of Inmarsat’s spectrum in order to give LightSquared a band uninterrupted by Inmarsat’s own services.
The companies have pushed back the second phase of the agreement to March 2014, although LightSquared could decide to restart phase 2 prior to this date. Phase 2 would involve LightSquared paying Inmarsat to continue to make its spectrum available.
Under the agreement, Inmarsat has agreed to lease 10MHz of L-Band spectrum to LightSquared. Inmarsat stated that it is currently using this spectrum.
LightSquared has been unable to roll out its network, after US regulators rejected its plans in February over concerns that LightSquared technology would interfere with GPS handsets.
It was also back in February that Inmarsat announced that LightSquared had missed the US$56.25m phase 1 payment. LightSquared said that pending questions had to be resolved before the phase was completed and the payment due. Inmarsat subsequently announced that LightSquared had failed to make another payment of US$29.6m.
The satellite operator said today that these notices of default would no longer have effect.
“The amended terms of the Cooperation Agreement will allow LightSquared additional time to secure regulatory consents that may ultimately lead to the deployment of its ATC Network in North America,” said Inmarsat.
According to an Inmarsat spokesman, LightSquared has now paid a total of approximately US$500m to Inmarsat, including the US$56.25m payment.
He said that Inmarsat is now confident it will be able to recognise US$325m of the revenues from LightSquared in its accounts. The rest of the payments by LightSquared have already been recognised.
In a research note published on 13 January, JP Morgan Cazenove analysts said that of its fair value of 800 pence per share for Inmarsat, 100 pence was driven by the LightSquared payments.
The research note also stressed that, even without LightSquared, the spectrum concerned will likely remain valuable, and a new owner of the frequencies would continue to make the payments.
The Inmarsat spokesman said his company had not received any expressions of interest for the spectrum it is currently leasing to LightSquared.
