Report: LightSquared could run out of cash in Q2 of next year

Wholesale LTE provider LightSquared could run out of money during the second quarter of next year if it doesn't get fresh cash, according to a Reuters report, which cited the company's financial statement. However, LightSquared insists it has enough liquidity to get it through an ongoing regulatory approval process.

According to the report, LightSquared registered a $427 million net loss during the first nine months of 2011, and according to its financial statement may not be able to "continue as a going concern" unless it can raise additional capital and financing. "There is a need to raise substantial capital beyond the beginning of the second quarter of 2012 in order to have sufficient liquidity," the statement said.

LightSquared is backed primarily by hedge fund Harbinger Capitol Partners, which has committed $3 billion to the venture. LightSquared, which has signed up 33 wholesale customers, cannot launch commercial service until federal regulators, including the FCC, conclude that its terrestrial operations will not cause harmful interference to GPS receivers. Tests are ongoing, but a decision on whether LightSquared can proceed is not expected until at least sometime early next year.

"LightSquared has cash through the next several quarters, but well beyond FCC clearance," a LightSquared spokesperson told FierceWireless.

The Reuters report notes in the next year LightSquared has "significant cash commitments" including making a $500 million to $700 million payment to its network-hosting partner Sprint Nextel (NYSE:S) as well as $310 million in payments to some of LightSquared's creditors. According to the financial statement, LightSquared generated $30 million in revenues during the first nine months of the year.

The National Telecommunications and Information Administration is still conducting GPS interference tests related to LightSquared's network, and the final results are not expected for several more weeks.

For more:
- see this Reuters article

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