Startup Company Calls Move The Best Thing For Both Parties

Sprint has officially cut its ties to LightSquared. In a news release Friday, Sprint called the move "unfortunate," and said it would have no impact on its other operations.

Sprint Nextel had 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."

In a statement also issued on Friday, LightSquared said that the decision 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 says its 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.

The company says it plans to move forward, and will 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. Smith called Sprint a "valued partner to LightSquared and we look forward to working together in the future."

FMI: www.lightsquared.com. www.sprint.com