The travails of LightSquared (news) added quite a bit of spice to the wireless business last year, and the news won’t be letting up now that 2012 has begun. Over the weekend, the 4G wholesale protagonist got at least a bit of good news with a reprieve from Sprint Nextel (NYSE:S, news, filings).
As part of the 15 year agreement the two signed over the summer, LightSquared had until December 31, 2011 to gain federal approval of their proposed buildout. However, despite LightSquared’s proposed technical fix the GPS community is still objecting on the basis of interference with existing devices and the FCC obviously didn’t sign off on schedule. Sprint has now granted them an additional 30 days to get that regulatory approval. Extra time will help LightSquared’s case, but it brings home just how little running room LightSquared has left. They had planned to be building by now, and it’s unclear how long of a delay their proposed business plan and their underlying finances can support.
Now that Sprint has resolved its relationship with Clearwire and their joint LTE buildouts in 2012 are ready to roll, the relationship with LightSquared is the last piece of the puzzle. I have speculated in the past that these three efforts seem likely to wind up under the same banner eventually in the end, although just how it might happen I have no clue. But first LightSquared will have to find its way out of GPS interference hell and right now such a thing doesn’t look like it’s going to happen quickly.
While Sprint would be glad to see them make it, I wonder if they might like it better if the FCC put the kibosh on any imminent buildout while extracting a pledge from the GPS community to accept a compromise over a period of some years. LightSquared would then need to restructure its plans in a big way, possibly selling out based on the value of the spectrum – and Sprint could step into that void.
On the other hand, AT&T might swoop in under those circumstances. That would negate some of the benefits, but the combined Sprint/Clearwire spectrum holdings are pretty substantial already. But it would also leave Clearwire’s LTE buildout as the wholesale choice of those partners that LightSquared has been signing up, which could help the underlying financials on that front.
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