Report: Sprint may end deal with LightSquared next week
Sprint Nextel (NYSE:S) may decide to terminate its network-hosting agreement with LightSquared as soon as next week, according to a Bloomberg report.
The report, which cited unnamed sources, said that Sprint does not plan to give LightSquared any additoinal time to make headway with regulators beyond the March 15 deadline. The previous deadline was Dec. 31 of last year but Sprint later extended that to March 15. LightSquared was dealt a crippling blow last month when, based on testing evaluated by the National Telecommunications and Information Administration, the FCC said it would not allow LightSquared to build its planned wholesale LTE network due to GPS interference concerns. LightSquared has vowed to fight that decision and build its wholesale LTE network.
A Sprint spokesman declined to comment and a LightSquared spokesman did not immediately respond to a request for comment on the Bloomberg report.
Last year, Sprint and LightSquared struck a 15-year network-hosting deal in which Sprint would have hosted LightSquared's 1.5 GHz L-band spectrum on its network infrastructure in exchange for $9 billion in payments and an additional $4.5 billion worth of service credits. However, work on the project was halted in December as concerns about LightSquared's regulatory troubles mounted.
According to a recent filing Sprint made with the Securities and Exchange Commission, Sprint can exit the deal for any reason after March 15 and before April 30. If LightSquared secures a lender's consent for modifications to the agreement, Sprint's right to terminate will be deferred until June 25 and will continue through Dec. 31.
If the deal does collapse, Sprint will keep $236 million of the $310 million LightSquared paid to Sprint last year. However, Sprint may have to return up to $74 million to LightSquared.
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