US mobile operator Sprint Nextel has cancelled its multi-billion dollar network sharing agreement with LightSquared because of the satellite/terrestrial venture’s unresolved GPS interference problems.
Sprint said it has also returned US$65m of…
US mobile operator Sprint Nextel has cancelled its multi-billion dollar network sharing agreement with LightSquared because of the satellite/terrestrial venture’s unresolved GPS interference problems.
Sprint said it has also returned US$65m of “prepayments” to LightSquared, which had originally been made to cover Sprint’s costs. These costs had not ultimately been incurred by Sprint.
LightSquared said the contract termination was “in the best business interests of both companies”. It also claimed 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,” said Sprint in a statement. The mobile operator added that it was still open to spectrum hosting agreements with LightSquared, if it was 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.
Problems with SkyTerra-1
Meanwhile, LightSquared has also faced problems with its Sky Terra-1 satellite.
A LightSquared spokesman confirmed the company had experienced “network disruption” with the satellite on 7 March.
He said the company is still investigating the cause of the disruption, and acknowledged that it happened during the widely-publicised solar storm last week.
“As an interim measure to more quickly restore services, we transitioned our customer traffic over to our MSAT satellite system, which is in place to provide coverage and service redundancy for our satellite network,” he said.
MSAT is LightSquared’s legacy satellite system of two spacecraft that supported its satellite traffic before SkyTerra-1 became operational in 2011.
The spokesman added that, until its investigation is completed, LightSquared will continue to operate customer traffic over its MSAT system. He claimed the company had 300,000 terminals in use, providing mobile satellite capacity to service providers and distributors in North America, with customers in sectors including government, energy exploration and fishing.
