Finally ending one of the least-secret partnership negotiations of recent memory, Sprint Nextel (NYSE:S, news, filings) and upstart wholesale wireless network operator today announced a multi-billion dollar, fifteen year deal. Sprint has been trying to put together a 4G strategy for years now, and perhaps adding this piece will finally let them finish the puzzle. But LightSquared is still embroiled in regulatory issues surrounding its use of former satellite spectrum due to interference claims by the GPS industry, which will surely need to be resolved first.
The arrangement will, if the regulatory stars eventually align, see LightSquared pay Sprint $9B in cash plus $4.5B in credits over eleven years to build out much of its LTE network. Sprint would then apply those credits to purchases from LightSquared’s 4G network. Sprint also gains the opportunity to purchase up to 50% of LightSquared’s expected L-Band 4G capacity. LightSquared will also enter into a 3G roaming agreement with Sprint, to fill out its coverage.
All of which leaves open the question of Sprint’s plans for Clearwire (NASDAQ:CLWR, news, filings). Do they take it in-house and create a migration plan to the next generation of LTE? Or do they cast it adrift? The latter would seem a bit silly, considering all the effort they put into it and the uncertainty that remains around LightSquared’s buildout itself. I think we’ll see much more on this in coming months.