LightSquared said that it has enough cash to operate through the first quarter of 2012 but it currently is unable to raise more money because of uncertainty from the FCC regarding the company's interference problem with high-precision GPS receivers.
Speaking at a Deutsche Bank Securities Leveraged Finance conference, LightSquared CFO Michael Montemarano said that the company has been looking at its options and it can "extend the runway of cash" if it has too but so far has chosen not take those steps.
Nevertheless, the company is hopeful that it will get the clarity it needs soon. LightSquared CMO Frank Boulben said that LightSquared partner Javad GNSS has introduced a new precision device that doesn't cause any interference. The company has completed the design and has 25 pre-production units ready for testing. Additionally, he said that another company is today announcing a filter that can be used with a precision GPS device to mitigate any interference and the filter will only cost $6. "We are now demonstrating that the issue can be solved quickly and at a low cost," Boulben said.
Boulben also recently said that gear to solve the interference problem between the company's proposed wholesale LTE network in the and high-precision GPS receivers could cost the commercial GPS industry as much as $400 million. (See related story)
Regarding the company's agreement with Sprint Nextel (NYSE:S), Montemarano said that the LightSquared has two provisions it must meet. The first, which was to have a deployable 5x5 MHz block of spectrum, was supposed to be met in September but was deferred to December because of the interference issue. "Now we have to have a 10x10 MHz [block] by year-end or we go back to the table with Sprint," he said.
However, Monemarano added that mutual success is important to both Sprint and LightSquared. "The relationship is important to both of us," he said, adding that by working with Sprint on an LTE overlay, LightSquared is reducing the costs of building a greenfield network in half.
Interestingly, Boulben also provided some estimates of the cost difference between what a traditional wireless operator will charge for a gigabyte of data compared to what LightSquared anticipates charging its wholesale partners. Boulben said an operator charges around $56 per gigabyte while LightSquared will be able to charge an amount in the "single digit per gigabyte." He noted that low price leaves plenty of room for wholesale partners to resell the data to consumers and still make money.
Earlier this month LightSquared said it may choose to pursue legal action to make sure it can deploy its network if concerns regarding the network's possible effect on GPS cannot be resolved. The company has been battling the GPS community, which has vehemently opposed LightSquared's network and has argued that LightSquared is distorting the historical record to put itself in a more favorable light. The GPS industry argues that if LightSquared operates a nationwide terrestrial network in L-Band spectrum, that signal will overwhelm GPS receivers, especially for precision GPS devices, in adjacent spectrum. LightSquared, in turn, has argued that the GPS industry should have known years ago that that it would build such a network and that GPS device manufacturers did not properly install filters on their devices to block LightSquared's signal.
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