LightSquared expects to receive between $3 billion and $3.5 billion in additional funding over the next two and a half years, according to a top company executive. The funding would help bolster its financial position as it starts a 15-year network hosting deal with Sprint Nextel (NYSE:S).
LightSquared CMO Frank Boulben said in an interview with FierceWireless that over the next two and a half years the company will, in several tranches "raise the $3 billion to $3.5 billion we need to get to peak funding that is needed to get to cash flow positive." Despite ongoing concerns over potential interference with GPS devices, LightSquared, which is backed by hedge fund Harbinger Capital Partners, managed to secure another $265 million in capital earlier this month. In total, the company has raised $2.3 billion in financing in the past year.
Boulben touched on a wide range of issues in the interview, including the funding, LightSquared's device plans for its wholesale LTE network, the company's relationship with vendor partner Nokia Siemens Networks and the FCC's review of GPS interference concerns posed by LightSquared's network. (Read the full interview here.)
BTIG analyst Walter Piecyk said LightSquared's deal with Sprint benefits both companies, because it gives Sprint new revenue (LightSquared has already paid Sprint $290 million this year), and allows LightSquared to build its network faster.
"Having Sprint as a network share partner should increase their [LightSquared's] ability to raise incremental capital," he said. "But that doesn't mean that they will be able to raise incremental capital." He cited GPS interference and LightSquared's business plan as concerns.
Boulben said LightSquared's planned devices will have to be modified to roam onto Sprint's CDMA network, since 3G roaming is part of the deal. "So we will have to work with the device and chipset vendors so that our devices are dual-mode, 4G LTE in the L-Band and 3G EV-DO in Sprint's band," he said.
LightSquared also said its wholesale customers will now launch commercial service in the second half of 2012. Boulben said the Sprint deal will allow LightSquared to accelerate its deployment schedule. "However, initially, we need to work with Sprint and their vendors on the specifications for our network and frequency band," he said. "And that takes a bit to initiate the system basically. And that's why initially we are losing a bit of time."
LightSquared still plans to use Nokia Siemens Networks for its core network, but will outsource to Sprint the radio access network elements of its network. Sprint is using Alcatel-Lucent (NASDAQ:ALU), Ericsson (NASDAQ:ERIC) and Samsung for its Network Vision Network Modernization project. Boulben said that the Sprint deal impacts LightSquared's $7 billion contract with Nokia Siemens, but would not say by how much.
The executive also touched on the FCC's review of LightSquared's proposal to mitigate GPS interference, which LightSquared submitted to the FCC in late June. Boulben said he expects a decision from the FCC by mid-September, and said he expects the FCC to approve the plan. "Our plan is absolutely adequate," he said.
- see the full interview
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