For its part, LightSquared has issued a formal response, saying that the contract termination is in "the best interests of both parties" and "not unexpected given the regulatory delays." On the upside, the company has had its coffers swelled by a not inconsiderable $65 million, which is the first good news it's had for a while.
OVERLAND PARK, Kan. (BUSINESS WIRE), March 16, 2012 - Sprint (NYSE: S) today issued the following statement regarding the spectrum hosting agreement it signed with LightSquared in June 2011. Per the agreement, Sprint agreed to deploy and operate an LTE network capable of utilizing the 1.6 GHz spectrum licensed to or available to LightSquared. The agreement contained contingencies related to possible interference issues with LightSquared's spectrum, including Sprint's right to terminate the agreement if certain conditions were not met by LightSquared.
"Sprint has been and continues to be supportive of LightSquared's business plans and appreciates the company's efforts to find a resolution to the interference issues impacting its ability to offer service on the 1.6 GHz spectrum. However, due to these unresolved issues, and subject to the provisions of the agreement, Sprint has elected to exercise its right to terminate the agreement announced last summer. We remain open to considering future spectrum hosting agreements with LightSquared, should they resolve these interference issues, as well as other interested spectrum holders.
"Late last year, both companies agreed to halt deployment design and implementation of LightSquared's network to ensure that Sprint's Network Vision project remained on schedule. While unfortunate, termination of the agreement will have no impact on Sprint's current customers and is not material to Sprint's ongoing business operations. Network Vision remains on schedule and on budget, and we look forward to begin launching our 4G LTE network mid-year.
"Per the terms of the agreement, Sprint has returned $65 million in prepayments LightSquared made to cover costs that were not ultimately incurred by Sprint."
LightSquared Says Sprint's Contract Termination is in the Best Business Interests of Both Companies
RESTON, Va., March 16, 2012 /PRNewswire/ -- LightSquared, a wholesale-only integrated 4G-LTE wireless broadband and satellite network, today said that the decision by Sprint Corp. to end its contractual relationship with LightSquared is in the best business interests of both companies, and was not unexpected given the regulatory delays that have impacted LightSquared.
"These regulatory delays are unfortunate because they will deprive the American people of the benefits of additional competition in the wireless industry," said Doug Smith, chief network officer and interim co-chief operating officer of LightSquared.
"For LightSquared, Sprint's decision will enhance our working capital and provide more flexibility," he said.
LightSquared's objective, through its wholesale business model, is to provide increased competition and lower prices in the telecommunications industry, and to bring broadband cellular phone service to rural areas currently underserved. LightSquared remains committed to moving forward with its nationwide network build out.
As LightSquared moves forward, it will also continue to focus on providing mobile satellite voice and data communications to private industry, public safety organizations and emergency responders across the United States and throughout North America.
"Sprint has been a valued partner to LightSquared and we look forward to working together in the future," said Mr. Smith.