The rumors were true, but given the long, torrid affair between these two it shouldn't be a surprise. Sprint and LightSquared have confirmed their intentions to the world, stepping into a whopping 15 year agreement that will be worth $9 billion in cash for Sprint and will save LightSquared an estimated $13 billion. LightSquared will have the right to sell access to Sprint's burgeoning LTE network, while Sprint can also piggy-back on the other's existing capacity where needed. Additionally, LightSquared will be able to roam on Sprint's current 3G network, opening new doors for one while helping the other accelerate its apparent transition to LTE. This is of course good news for Sprint and naturally for LightSquared, which is trying desperately to put the whole GPS fiasco behind it. The loser? Clearwire, we'd say -- and WiMAX in general.
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Sprint Nextel and LightSquared Announce Spectrum Hosting and Network Services Agreement
LightSquared enters into a Spectrum Hosting and Network Services Agreement with Sprint that is expected to result in substantial savings for LightSquared and accelerate completion of LightSquared's nationwide 4G-LTE network
Sprint has option to purchase 4G capacity from LightSquared
LightSquared enters into a nationwide 3G Roaming Agreement with Sprint
http://www.LightSquared.com (Graphic: LightSquared)
RESTON, Va. & OVERLAND PARK, Kan. (BUSINESS WIRE), July 28, 2011 - LightSquared™, the nation's first wholesale-only integrated 4G-LTE wireless broadband and satellite network, and Sprint Nextel (NYSE: S) announced today they have entered into a 15-year agreement that includes spectrum hosting and network services, 4G wholesale, and 3G roaming.
This spectrum hosting arrangement leverages Sprint's investment in its innovative, multi-year Network Vision plan. Under the agreement, LightSquared will pay Sprint to deploy and operate a nationwide LTE network that hosts L-Band spectrum licensed to or available to LightSquared. As a wholesale-only carrier with separate core network operations, LightSquared can sell its 4G broadband capacity produced through this spectrum hosting relationship to Sprint, other wireless carriers, and retail partners.
Under the terms of the agreement, during an 11 year period, LightSquared will make payments to Sprint of approximately $9 billion in cash for spectrum hosting and network services as well as LTE and satellite purchase credits which are currently estimated to be valued at approximately $4.5 billion. The agreement also provides Sprint the opportunity to purchase up to 50 percent of LightSquared's expected L-Band 4G capacity. The wholesale purchase credits will provide Sprint the option to obtain cost-competitive access to 4G capacity by offsetting Sprint's purchases of 4G capacity from LightSquared, should Sprint elect to incorporate the L-Band LTE capability as part of its 4G offering.
This agreement is expected to lower network capital and operating expenses for LightSquared by more than $13 billion over the next eight years in comparison with the cost of a stand-alone network build. LightSquared expects the deployment of the nationwide 4G-LTE network to be completed more than one year ahead of the Federal Communications Commission (FCC) mandate to cover 260 million Americans by 2015.
LightSquared has also entered into a 3G nationwide roaming agreement with Sprint. With access to Sprint's 3G nationwide network, LightSquared's wholesale customers will be able to offer combined 4G/3G data services as soon as LightSquared launches its first 4G markets in 2012.
"This spectrum hosting agreement with LightSquared allows Sprint to more efficiently use its Network Vision platform," said Steve Elfman, president of Network Operations and Wholesale for Sprint. "In addition to improving our cash flow, it provides additional options and flexibility in how we meet our customers' future capacity needs."
"This agreement gives LightSquared a rapid and cost-effective radio access network build," said LightSquared Chairman and CEO Sanjiv Ahuja. "With our next generation satellite already operational and our independent core network build underway, LightSquared is now well positioned to meet the fast-growing market demand for wireless broadband services with its wholesale-only integrated 4G-LTE and satellite network."
The agreement is subject to LightSquared's obtaining resolution and FCC approval of certain interference issues involving terrestrial use of the L-Band spectrum.
"We believe LightSquared, in cooperation with the FCC and adjacent spectrum users, is taking proactive steps to address and resolve these issues in a timely manner," said Elfman.