Sprint, LightSquared Finally Team Up

July 28th, 2011 by · 6 Comments

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.

Categories: Wireless

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6 Comments So Far


  • anon says:

    Rob,

    This board seems very focused on the XO mess which is no doubt a saga. But over in Overland Park, Kansas, a complete disaster continues to unfold (can smoldering ruins be lit on fire again?). Maybe we should spend some time obsessing over this train wreck: Sprint.

    In my opinion, Sprint has become a business school case study in board abdication, lack of strategic direction, bureaucratic mission killing and overall bad management.

    If i have this right, they had a great, enterprise business (left to die years ago, literally gave away F500 clients), which they abandoned to go all in (but not really) on Wireless. and then they took half measures, didn’t spend or innovate. Did a ruinous stock deal for Nextel’s junky IDEN radio network, failed to integrate it (didn’t even pick a single name or brand identity), worked to have the worst customer service in the industry. And then invest-waffled (with billions) into clearwire, now abandon clearwire for LightSquared (has no network, just an idea, some funding [?] and regulatory issues.

    Worse yet, Bloomberg and others report that the CEO has a whiteboard in his office and spends all day and night planning how to keep at&t from buying tmobile. Of course sprint could have: bought tmobile, chosen GSM, built LTE, fixed customer service disaster, improved retail distribution, partnered with a tech company (e.g., att and apple, vz and google’s android, etc).

    Another post can review financial mess: no ROI, $18B in debt, serial earnings/metric misses and, oh yeah, no tangible assets at all. none.

    is there anyone left on the sprint board who cares about the company? not managers with free upside options, but actual investors with capital at risk??

  • Avatar of Rob Powell Rob Powell says:

    Sprint’s misfortunes are certainly a large subject, and I do update now and then on the subject. The difference with XO, as I see it, is Sprint’s decline over the last half decade appears to be unintentionally self-inflicted, whereas XO’s seems rather deliberate on someone’s part.

  • anon says:

    thanks Rob. whether sprint’s woes are intentional or the product of compounding, bad decisions is actually unclear to me. the board of directors at sprint either meant to ruin the company or happened to do so by making a series of very bad decisions. e.g. cdma, iden, wimax, etc

  • Carlk says:

    I have been observing this Sprint saga unfold as long as (3) over the years, and if there is one thing that seems a certainty today as in days prior for this organization, there is a lack of accountability at the pinnacle of the ship in the CEO’s office with respect to the lack of fiduciary responsibility being exercised, never mind vision.

    Now, there are some who I know that are suggesting things far worse including intentional acts of bad faith on the part of that CEO.

    If these things are true, the drum beats will continue getting louder as his head is brought unto the chopping block.

    I for one believe in personal accountability, so watching this misfit telecom organization moving forward is going to be nothing less than exciting for outside observers looking in, but very stressful for insiders including Dan, The Hustle, Hess attempting not being perceived as Dan, The Huckster, Hess.

  • anon says:

    my point (not well made) is that it doesnt really matter. in fact, one could argue that taking a solid brand and company and allowing/choosing it to degrade is, in many respects, worse than a “raider” buying an insolvent clec and extracting its most valuable asset: its NOL’s.

    No one got upset when the other dozen insolvent clec’s were bought and managed for their remaining value. even xo bought allegiance and consolidated staff, assets, etc. kept switches and got rid of expensive, re-sold bell circuits. once you go into BK, the creditors deserve to be repaid — frankly if CI hadn’t bought CO someone else would have and used it for their purposes.

    Sprint on the other hand is just a basket case. no strategy, and alarming tendency to pick the wrong tech (a problem for a tech services company) and, to top it off, horrible customer service. to me, this is the telco debacle of the decade.

  • Carlk says:

    You make a very strong case for that nefarious operator, CI, to the extent that you sold me except for the fact that the way he got his grubby paws around the asset in addition to using it for purposes that should have been deemed improper or contractually precluded; should be a case study in captive, complicit legislators and court officials.

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