Sprint consummates LTE network-sharing deal with LightSquared

Sprint Nextel (NYSE:S) has reportedly reached a 15-year network-sharing deal with LightSquared worth around $20 billion. According to Bloomberg, Sprint and LightSquared will build LightSquared's nationwide network, and Sprint will be a wholesale user of LightSquared.

"LightSquared and Sprint will jointly develop, deploy and operate LightSquared's 4G LTE network," wrote Philip Falcone to Harbinger Capital Partners investors in a letter obtained by Bloomberg. "Sprint will become a significant customer of LightSquared's 4G LTE network."

Falcone is the billionaire investor behind Harbinger Capital Partners, which is funding LightSquared's efforts. Representatives from Sprint and Harbinger declined to comment.

The deal was also reported by other news outlets, including the Wall Street Journal and the New York Times. The NYT said the deal could be worth around $15 billion, but said the final terms of the deal are still unclear.

If the reports are true, the repercussions of the deal are extensive. For Sprint, it represents the carrier's response to Verizon Wireless' (NYSE:VZ) LTE buildout and AT&T Mobility's (NYSE:T) planned LTE deployment. It also casts questions on the pact between Sprint and Clearwire (NASDAQ:CLWR); Sprint resells Clearwire's WiMAX network. A Clearwire representative declined to comment on the Sprint/LightSquared news.

"This [Sprint/LightSquared] relationship, in our view, further distances Sprint from its long term relationship with Clearwire to provide Sprint with its 4G network needs," wrote Jamie Townsend, managing partner of strategy and marketing with analyst firm TownHall Investment Research, in a research note. "We believe that Sprint will continue to rely on the Clearwire network until it is able to transition to dependence on LightSquared. After that we believe that Sprint will increasingly look to Clearwire as a supporting effort and asset to Sprint's longer term network needs."

For LightSquared, the deal represents an affirmation of the company's business model and technology. LightSquared has inked deals with the likes of Leap Wireless (NASDAQ:LEAP) and Best Buy, but an agreement with Sprint would catapult LightSquared into prominence. However, it's unclear if or whether LightSquared's agreement with Sprint will affect its GPS troubles; LightSquared's planned network is under fire from the GPS community for potentially interfering with GPS receivers. LightSquared recently delayed a report on the topic to the FCC until July 1.

During the past several months, Sprint repeatedly has been rumored to be in discussions with LightSquared, and LightSquared's CEO recently confirmed the talks. Indeed, the Wall Street Journal earlier this week reported LightSquared received approval from its creditors to have Sprint take control of its spectrum should LightSquared default on its debt.

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

Related Articles:
Seybold's Take: Why LightSquared's proposed system will interfere with GPS
LightSquared CEO Ahuja confirms talks with Sprint
Two government agencies say LightSquared's network interferes with GPS
FCC's Genachowski: We won't let LightSquared operate without GPS interference resolution
Report: Sprint, LightSquared near $2B/year network-sharing deal

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