WSJ: Sprint to officially cut ties with LightSquared on Friday, to return $65 million
LightSquared, financially backed by Philip Falcone and his Harbinger Capital Partners hedge fund, planned on using satellite wireless airwaves to build out a ground-based 4G LTE network, which would offer service to 260 million Americans by 2016. It was discovered that LightSquared's technology was causing interference with nearby GPS signals including those involved in military operations. No matter what LightSquared tried, it could not stop the interference. The wholesale LTE carrier tried to prove that there was a bias in the testing, but failed to get the FCC to budge.
Now LightSquared will have to look elsewhere for the major partner it needs to put up the 40,000 towers it needs to compete with other U.S. carriers offering LTE service. Friday is the final day for public comments to be filed on the FCC decision not to allow LightSquared's network to operate and the company said it would submit papers in its defense on Friday. According to an insider, the 150 page document will cover the question of bias with the outside testing, the history of previous regulatory rulings and other pertinent matters.
LightSquared's lenders had until the end of Thursday to extend the company's network-sharing and operations contract with Sprint until this June. There was no word on what the lenders decided on doing. LightSquared had previously said that the contract would save it $15 billion through the end of the decade. There is still the question of the vulture investors who have poured money into LightSquared's deeply discounted debt for pennies on the dollar, hoping to have a say in the restructuring of the company if it goes through bankrupt.