07.28.2011 08:40 AM
LightSquared, Sprint Cut $9 Billion, 15-Year Shared-Services Deal
RESTON, VA. and OVERLAND PARK, KAN.: LightSquared and Sprint Nextel today announced a long-awaited shared services agreement. The two have entered into a 15-year deal that includes spectrum hosting and network services, 4G wholesale, and 3G roaming.

This spectrum hosting arrangement leverages Sprint’s investment in its multi-year Network Vision plan. Under the agreement, LightSquared will pay Sprint to deploy and operate a nationwide LTE network that hosts L-Band spectrum licensed to or available to LightSquared. As a wholesale-only carrier with separate core network operations, LightSquared can sell its 4G broadband capacity produced through this spectrum hosting relationship to Sprint, other wireless carriers, and retail partners.

Under the terms of the agreement, during an 11-year period, LightSquared will make payments to Sprint of approximately $9 billion in cash for spectrum hosting and network services as well as LTE and satellite purchase credits which are currently estimated to be valued at approximately $4.5 billion. The agreement also provides Sprint the opportunity to purchase up to 50 percent of LightSquared’s expected L-Band 4G capacity. The wholesale purchase credits will provide Sprint the option to obtain cost-competitive access to 4G capacity by offsetting Sprint’s purchases of 4G capacity from LightSquared, should Sprint elect to incorporate the L-Band LTE capability as part of its 4G offering.

This agreement is expected to lower network capital and operating expenses for LightSquared by more than $13 billion over the next eight years in comparison with the cost of a stand-alone network build. LightSquared expects the deployment of the nationwide 4G-LTE network to be completed more than one year ahead of the Federal Communications Commission mandate to cover 260 million Americans by 2015.

Deal terms also allow LightSquared to use Sprint’s 3G network in areas where it doesn’t yet offer 4G services. LightSquared’s wholesale customers will be able to offer combined 4G/3G data services as soon as LightSquared launches its first 4G markets in 2012.

“This agreement gives LightSquared a rapid and cost-effective radio access network build,” said LightSquared Chairman and CEO Sanjiv Ahuja.

The agreement is subject to FCC approval, which is pending over issues related to interference with global positioning systems. The commission’s docket on Lightsquared has nearly 1,900 comments since it was opened June 30.
~ Deborah D. McAdams


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Wednesday 11:59 PM
Peer Profile: Tomaž Lovsin, STN, Slovenia
“Will there be a shift from coax to fibre? Or a mixture between the two which will require hybrid solutions to be implemented?”


 
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