Harbinger, Falcone Seek Cash for SkyTerra’s Buildout

Back in March, plans by Harbinger Capital Partners became public to take spectrum formerly intended for the satellite business and repurpose it into a national wireless network based on LTE via the vehicle SkyTerra.  The prospect of a brand new 4G network in the US that stands independent of the large established players is of course enticing.  However, there are still some hurdles that must be cleared first it seems.

Harbinger is now seeking to raise $400M to cover near term costs such as satellite launch insurance and wireless base station development.  Their plan apparently includes two satellites and 30,000 base stations.  I assume the satellites are to handle the wide open spaces between the towers?  According to the terms set by the FCC on its spectrum, SkyTerra has until 2012 to cover 100M people, a date just 18 months away.

Philip Falcone, who is the force behind Harbinger, is said to have been combing the markets all year for partners to put in $1-2B into the business.  Right now he seems to be offering up Harbinger’s stake in SkyTerra and other holdings as well as collateral.  And that just to raise a small portion of what is needed to build out the network. The current debt offer is being managed by UBS.

It’s sort of like clwr, except without the big corporate friends with deep pockets.  And in a way Clearwire is exactly the problem – those likely to be tempted by a wireless alternative are probably already behind WiMAX.  For those that aren’t, to join another entity that isn’t even really off the ground yet, needs cash, and has deadlines to meet that don’t derive from getting there first….  It is an even bigger jump.  Bankers and hedge fund managers nowadays are rather wary, to say the least.  But I think Falcone will get his money this time.

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Categories: Financials · satellite · Wireless