US mobile operator Sprint Nextel has cancelled its multi-billion dollar network sharing agreement with LightSquared due to the satellite/terrestrial venture’s unresolved problems of GPS interference.
Sprint said that it has also returned US$65m of…
US mobile operator Sprint Nextel has cancelled its multi-billion dollar network sharing agreement with LightSquared due to the satellite/terrestrial venture’s unresolved problems of GPS interference.
Sprint said that it has also returned US$65m of “prepayments” to LightSquared, which had originally been made in order to cover Sprint costs. These costs had not ultimately been incurred by Sprint.
LightSquared said that the contract termination was “in the best business interests of both companies”. It also claimed that the decision was not unexpected, given the regulatory delays it has faced.
Doug Smith, LightSquared’s interim co-COO, explained that “Sprint’s decision will enhance our working capital and provide more flexibility”.
Under an agreement made by the companies in July 2011, LightSquared would pay Sprint US$9bn and provide “satellite purchase credits” valued at US$4.5bn.
This would have been in return for Sprint deploying and operating an LTE network hosting LightSquared’s L-band spectrum.
But the two companies agreed late last year to halt the implementation of LightSquared’s LTE network in order to ensure that Sprint’s own network upgrade, known as “Network Vision”, stayed on schedule.
The agreement between the companies originally had a deadline of 31 December 2011 for LightSquared to get regulatory approval to deploy its network.
Sprint extended this deadline twice, first to January and then to mid-March.
But LightSquared’s technology has been put under the microscope by regulators due to its interference with GPS systems.
In February, the FCC rejected LightSquared’s plans for a wireless broadband network.
As a result, Sprint said that it had decided to exercise its right to terminate the agreement.
“While unfortunate, termination of the agreement will have no impact on Sprint’s current customers and is not material to Sprint’s ongoing business operations,” Sprint said.
The mobile operator added that it was still open to spectrum hosting agreements with LightSquared, if it were able to resolve the GPS interference issues, or with other spectrum holders.
The FCC has asked for comments on its statement regarding LightSquared’s network plans. The deadline for comments is today.
