Satellite/terrestrial venture LightSquared has reportedly agreed to a 15-year contract to share the costs of network expansion and equipment with cellco Sprint Nextel.
LightSquared is backed by New York-based hedge fund Harbinger Capital Partners, which…
Satellite/terrestrial venture LightSquared has reportedly agreed to a 15-year contract to share the costs of network expansion and equipment with cellco Sprint Nextel.
LightSquared is backed by New York-based hedge fund Harbinger Capital Partners, which is headed by Philip Falcone.
A Bloomberg report on Saturday stated that Falcone had written a letter to Harbinger investors, confirming the agreement.
The letter reportedly said that LightSquared and Sprint would jointly develop, deploy and operate LightSquared’s 4G LTE network. Sprint would also become a “significant customer” on LightSquared’s LTE network.
An official announcement has not been made, with both LightSquared and Sprint declining to comment.
Media reports suggested that LightSquared would be using Sprint’s network of towers to develop its own LTE network. This could potentially cut costs significantly and speed up the roll-out of the LightSquared network.
The deal also has advantages for Sprint, whose customers would be able to use LightSquared’s network. It will also gain much-needed capacity as demand for mobile broadband increases rapidly.
It could also be a new source of revenue for Sprint. Earlier reports had suggested that LightSquared would make a cash payment to Sprint to use its network, with Bloomberg suggesting a sum of US$20bn.
Questions have been raised about where a deal will leave Sprint’s relationship with WiMax wholesaler Clearwire, in which it holds a 54% stake.
Clearwire did not reply to questions before the press deadline.
According to the Financial Times, Sprint’s CEO Dan Hesse is to make a 4G strategy statement later this month.
