Harbinger forges $7B LTE pact with Nokia Siemens

Harbinger Capital Partners (a Fierce 15 winner) awarded an eight-year, $7 billion contract to Nokia Siemens Networks to provide the network design and equipment for its wholesale LTE network, which will be run by a new venture called LightSquared. LightSquared said its network will allow for terrestrial-only, satellite-only or integrated satellite-terrestrial services (via the terrestrial and MSS spectrum Harbinger scored through a merger in March with satellite operator SkyTerra)--a notable selling point in a wireless market divided between ground-based cellular networks and satellite offerings from the likes of Iridium and others. The network is going to be launched in the second half of 2011, according to the Financial Times.

LightSquared videoThe mammoth contract underscores the seriousness of Harbinger's approach, and partially alleviates funding concerns. LightSquared, which will be led by former Orange CEO Sanjiv Ahuja, said it secured $1.75 billion in debt and equity financing. Further, according to the FT, Harbinger has ponied up around $2.9 billion. However, the price tag for LightSquared's network could be as high as $6 billion, depending on the scope of the network buildout.

LightSquared said its network will consist of around 40,000 cellular base stations and will cover 92 percent of the U.S. population by 2015. As a condition of its deal to acquire SkyTerra, Harbinger must cover at least 100 million POPs in the U.S. by the end of 2012, 145 million POPs by the end of 2013 and 260 million POPs by the end of 2015.

Philip Falcone, the head of Harbinger, told the FT that potential wholesale customers could include T-Mobile USA, or prepaid carriers Leap Wireless (NASDAQ:LEAP) and MetroPCS (NYSE:PCS). T-Mobile has been mentioned as a potential partner in the past.

As LightSquared gets off the ground, it likely will face continued regulatory opposition from AT&T (NYSE:T) and Verizon Wireless (NYSE:VZ). Both operators, which are building out LTE networks of their own in 700 MHz spectrum, regard some of the proposed network's terms discriminatory. In approving the merger of SkyTerra and private-equity firm Harbinger, the FCC approved a provision that requires SkyTerra to ask for approval before leasing capacity on the network to the "largest or second-largest wireless provider." Harbinger wanted this provision to be included. In addition, AT&T and Verizon are being forbidden from holding more than 25 percent of the spectrum. Verizon is the nation's largest wireless provider and AT&T is the second largest.

As for Nokia Siemens, the deal is the second big move for the infrastructure vendor in as many days. The company said Monday that it will acquire Motorola's (NYSE:MOT) wireless networks business for $1.2 billion, a move that will likely strengthen NSN's position in North America and Japan.

For more:
- see this release
- see this FT article
- see this Engadget post

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