Friday, 24 March 2017
Last updated 50 min ago
Mar 7 2012 | 3:35pm ET
LightSquared's most important customer appears disinclined to wait for the Harbinger Capital Management-backed wireless Internet company to make a last-ditch effort for survival before ending its deal.
Sprint Nextel Corp. will pull the plug on its $13.5 billion agreement with LightSquared as soon as next week. The move comes after the Federal Communications Commission last month said it would withdraw LightSquared's preliminary approval and would not give it any further approvals due to interference with global positioning systems.
The FCC did give LightSquared an extra two weeks, until March 15, to make its case to the regulator. That day is also the most recent deadline Sprint has set for LightSquared to win final regulatory approval, but Sprint does not plan to give LightSquared another extension, Bloomberg News reports.
Sprint could see its right to terminate extended until June 25 if LightSquared lenders approve changes to its deal. Either way, if the deal is dead, Sprint will get to keep $236 million of the $310 million LightSquared has already paid it.
Sprint isn't alone among LightSquared's partners mulling the company's future. Nokia Siemens Networks, which, like Sprint, was engaged by LightSquared to build its wireless network, said it stopped work on its part last year—at LightSquared's request. And satellite company Inmarsat—which Harbinger chief Philip Falcone once dreamed of merging with LightSquared—told investors yesterday that it can't be sure it will see another dime from its deal with LightSquared.
"While we have a contract with LightSquared, they previously asked us to put our activities related to the network build on hold while they resolve" their regulatory issues, a Nokia Siemens spokesman said.
Inmarsat investors should "take a very conservative stance on payments being received," CEO Rupert Pearce said yesterday. There is "significant uncertainty" about LightSquared's future ability to make payments, and the company is already in default on a $56.3 million payment due last month.
LightSquared payments had been the "primary driver" of sales growth for Inmarsat last year.