Sprint announces the end of its deal with LightSquared [UPDATED]

Alex Wagner
Editorial Director of News and Content from Omaha, NE
Published: March 16, 2012

Sprint logo

We heard it was coming, and now the decision is officially official. Sprint just announced that it has decided to terminate its agreement with LightSquared. The deal would've allowed Sprint to operate a 4G LTE network utilizing 1.6GHz spectrum from LightSquared. However, the agreement also made note of possible interference issues with LightSquared's spectrum, and so Sprint has decided to exercise its right to axe the contract since LightSquared has been unable to gain FCC approval to begin building out its LTE network. Sprint has returned $65 million in prepayments to LightSquared, and it says that it remains supportive of LightSquared's plans and is open to working with the company in the future if it can resolve its interference problems.

So now the deal is done. Sprint assures us that its Network Vision project is on schedule and that it still plans to launch its 4G LTE network by mid-year, so you folks on the Now Network don't need to worry about today's news affecting your plans to ride Sprint's LTE airwaves. We've yet to get comment from LightSquared on today's news, but yesterday the company said that it plans to hand a 150-page filing to the FCC in an attempt to defend its network plans, so it'll be interesting to see what the company has to say to the FCC and how the agency reacts. Until we hear more, you can peruse Sprint's official press release announcing this news down below.

UPDATE: LightSquared has issued its own press release concerning the end of its agreement with Sprint. The company explains that the decision to terminate the deal is in "the best business interests" of them both and "was not unexpected" considering the regulatory delays that LightSquared has encountered. Finally, LightSquared says that today's decision will provide it with more capital and flexibility and that it looks forward to working with Sprint again in the future. You can find LightSquared's announcement below.

 

Sprint Elects to Terminate Spectrum Hosting Agreement with LightSquared

OVERLAND PARK, Kan. (BUSINESS WIRE), March 16, 2012 - Sprint (NYSE: S) today issued the following statement regarding the spectrum hosting agreement it signed with LightSquared in June 2011. Per the agreement, Sprint agreed to deploy and operate an LTE network capable of utilizing the 1.6 GHz spectrum licensed to or available to LightSquared. The agreement contained contingencies related to possible interference issues with LightSquared's spectrum, including Sprint’s right to terminate the agreement if certain conditions were not met by LightSquared.

“Sprint has been and continues to be supportive of LightSquared’s business plans and appreciates the company’s efforts to find a resolution to the interference issues impacting its ability to offer service on the 1.6 GHz spectrum. However, due to these unresolved issues, and subject to the provisions of the agreement, Sprint has elected to exercise its right to terminate the agreement announced last summer. We remain open to considering future spectrum hosting agreements with LightSquared, should they resolve these interference issues, as well as other interested spectrum holders.

“Late last year, both companies agreed to halt deployment design and implementation of LightSquared’s network to ensure that Sprint’s Network Vision project remained on schedule. 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. Network Vision remains on schedule and on budget, and we look forward to begin launching our 4G LTE network mid-year.

“Per the terms of the agreement, Sprint has returned $65 million in prepayments LightSquared made to cover costs that were not ultimately incurred by Sprint.”

About Sprint Nextel

Sprint Nextel offers a comprehensive range of wireless and wireline communications services bringing the freedom of mobility to consumers, businesses and government users. Sprint Nextel served more than 55 million customers at the end of 2011 and is widely recognized for developing, engineering and deploying innovative technologies, including the first wireless 4G service from a national carrier in the United States; offering industry-leading mobile data services, leading prepaid brands including Virgin Mobile USA, Boost Mobile, and Assurance Wireless; instant national and international push-to-talk capabilities; and a global Tier 1 Internet backbone. Newsweek ranked Sprint No. 3 in its 2011 Green Rankings, listing it as one of the nation’s greenest companies, the highest of any telecommunications company. You can learn more and visit Sprint at www.sprint.com or www.facebook.com/sprint and www.twitter.com/sprint.

LightSquared Says Sprint’s Contract Termination Is in the Best Business Interests of Both Companies

RESTON, Va., March 16, 2012 – LightSquared, a wholesale-only integrated 4G-LTE wireless broadband and satellite network, today said that the decision by Sprint Corp. to end its contractual relationship with LightSquared is in the best business interests of both companies, and was not unexpected given the regulatory delays that have impacted LightSquared.

“These regulatory delays are unfortunate because they will deprive the American people of the benefits of additional competition in the wireless industry,” said Doug Smith, chief network officer and interim co-chief operating officer of LightSquared.

“For LightSquared, Sprint’s decision will enhance our working capital and provide more flexibility,” he said.

LightSquared’s objective, through its wholesale business model, is to provide increased competition and lower prices in the telecommunications industry, and to bring broadband cellular phone service to rural areas currently underserved. LightSquared remains committed to moving forward with its nationwide network build out.

As LightSquared moves forward, it will also continue to focus on providing mobile satellite voice and data communications to private industry, public safety organizations and emergency responders across the United States and throughout North America.

“Sprint has been a valued partner to LightSquared and we look forward to working together in the future,” said Mr. Smith.

About LightSquared

LightSquared’s mission is to revolutionize the U.S. wireless industry. With the creation of the first-ever, wholesale-only nationwide 4G-LTE network integrated with satellite coverage, 

LightSquared offers people the speed, value and reliability of universal connectivity, wherever they are in the United States. As a wholesale-only operator, LightSquared will deploy an open 4G wireless broadband network to be used by existing and new service providers to sell their own devices, applications and services – at a competitive cost and without retail competition from LightSquared. The deployment and operation of LightSquared’s network represent more than $14 billion of private investment over the next eight years. For more information about LightSquared, , please go to www.LightSquared.com, www.facebook.com/LightSquared and www.twitter.com/LightSquared.