Falcone's Harbinger Capital loses 47% of value due to LightSquared writedown

Harbinger Capital Partners, the hedge fund that backs wholesale LTE provider LightSquared, reported a 47 percent drop in its biggest fund, thanks in large part to a writedown in the company's investment in LightSquared. LightSquared is still working to secure approval from regulators to launch its terrestrial service, which has been mired in concerns that its network interferes with GPS receivers.

According to multiple reports, the losses in 2011 caused Philip Falcone's Harbinger to see its assets drop to $4 billion at the end of 2011, from a high of $26 billion in 2008. Harbinger has invested $3 billion in LightSquared, and Harbinger cut the value of its investment in LightSquared by nearly 60 percent.

"The decline was primarily due to a conservative adjustment in the Fund's holdings of LightSquared, to be consistent with the results of work done by the Fund's third party valuation firm," Harbinger spokesman Lew Phelps said in a statement released to news outlets Friday. "The valuation takes into account uncertainty about the outcome of political issues related to alleged interference with the GPS system by LightSquared transmitters," Phelps added.

LightSquared is working with the FCC and National Telecommunications and Information Administration on GPS interference tests. The FCC must certify that all concerns have been addressed before LightSquared can begin operations, and the drawn-out process has increased concerns that LightSquared may run out of money. However, LightSquared officials said last month that the company has enough money to last for "several quarters."

Last week Sprint Nextel (NYSE:S) gave LightSquared until mid-March to get FCC approval to launch service. Sprint and LightSquared announced a 15-year, $9 billion network-hosting deal last July, whereby Sprint will build LightSquared's radio access network as part of Sprint's own network upgrade (LightSquared will operate its own, separate core network).

The FCC said last month that it will take public comment on a LightSquared petition until Feb. 27, with follow-up responses due by March 13. In December LightSquared petitioned the FCC to declare that GPS device makers are at fault for interference caused between LightSquared's L-band spectrum and GPS receivers, and that LightSquared, a licensed spectrum holder, should be allowed to launch commercial service as quickly as possible.

For more:
- see this Bloomberg article
- see this Reuters article
- see this WSJ article (sub. req.)

Related Articles:
Sprint extends lifeline to LightSquared until mid-March
FCC comment period keeps LightSquared hopes alive
LightSquared blasts U.S. GPS interference tests, says Sprint is in the loop
Sprint puts LightSquared pact on hold while awaiting word from regulators
LightSquared lands deadline extension from Sprint
LightSquared presses FCC to let it launch LTE service

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