Thursday, 30 June 2016
Last updated 9 hours ago
Feb 15 2012 | 3:00pm ET
The Federal Communications Commission has dealt a potentially fatal blow to Harbinger Capital Management's wireless Internet venture—a serious, if not fatal, blow to the hedge fund itself.
The regulator said it would withdraw the preliminary approval it granted to LightSquared last year after a series of government tests found that LightSquared's network would interfere with global positioning systems. The decision puts in jeopardy the more than $3 billion—more than half of its total assets—that Harbinger has invested in LightSquared.
"The commission clearly stated from the outset that harmful interference to GPS would not be permitted," FCC spokeswoman Tammy Sun said. "The commission will not lift the prohibition on LightSquared."
LightSquared has called the validity of the negative tests into question and said that interference issues could be resolved. Before the FCC announced its decision yesterday, the company said that it remained "committed to finding a resolution with the federal government and the GPS industry."
LightSquared was responding to a letter from National Telecommunications and Information Administration chief Lawrence Strickling telling FCC Chairman Julian Genachowski, "there are no mitigation strategies that both solve the interference issues and provide LightSquared with an adequate commercial network deployment."