05.24.12

How many billionaires does it take to screw in a LightSquared?

Posted in Financials, LightSquared, Operators, Regulatory, Spectrum at 3:12 pm by timfarrar

In my last post, I noted the skepticism of some observers about whether Charlie Ergen was really behind Sound Point buying $350M of LightSquared’s first lien debt, despite one potentially logical technical solution that could combine LightSquared’s spectrum (as uplinks) with the TerreStar and DBSD spectrum (if that was all converted to downlinks). Indeed LightSquared itself proposed to the FCC last week that the 2GHz spectrum could be used for its downlinks as one of the options for a spectrum swap and suggested in its comments in the DISH AWS-4 proceeding that the FCC should redesignate DISH’s 2GHz uplinks as downlink spectrum.

However, it now appears that many of the debtholders (and perhaps even Harbinger/LightSquared) seem to have concluded that it is not Charlie Ergen backing Sound Point, but the funding for the purchase of Carl Icahn’s stake instead came from yet another billionaire, Carlos Slim of Telmex and America Movil. Of course, Ergen and Slim are allies in DISH Mexico (Telmex provides billing services and sells the DISH Mexico service) and its been suggested to me that Ergen may have proposed Slim should use Sound Point, so that people would inevitably jump wrongly to the conclusion that Ergen was behind the LightSquared investment.

America Movil has recently announced that it is acquiring Simple Mobile, a unit of T-Mobile USA, as well as bidding for an increased stake in KPN of the Netherlands, and it is plausible to conclude that it might ultimately want to go beyond its current MVNO strategy in the US, by investing in a facilities-based network. In that context the two logical candidates at this point in time would be T-Mobile USA (whose parent Deutsche Telekom is still open to a “merger or asset sharing deal”) and DISH. Its therefore interesting to note that T-Mobile is suddenly now trying to derail DISH’s plans in the AWS-4 proceeding.

Acquisition of a LightSquared stake might provide Slim with another bargaining chip in any negotiations to invest in a US carrier, especially if he could wait patiently for LightSquared’s regulatory issues to be resolved, because he doesn’t necessarily need his own facilities based network immediately. However, he might also be able to bring a lot of pressure to bear on LightSquared, because as I pointed out back in December 2010, the decision of the Mexican government to build and launch the MEXSAT L-band satellites gives them an effective veto right over LightSquared’s ability to use much of its L-band spectrum.

All in all, its fascinating to watch quite how many billionaires seem to be attracted to LightSquared like moths to a lightbulb. Some, like Carl Icahn and Andrew Beal, have already left the scene, while one has lost his billions trying to make something of it. Meanwhile, the rest of us can only wait to see if this rumor turns out to be true, and if so what plan Slim might have in mind.

5 Comments »

  1. Muni Bids | Why LightSquared lenders want Falcone to go away, and why that might never happen said,

    July 9, 2012 at 9:42 pm

    [...] Farrar, a telecom analyst w&#1110th TMF Associates, h&#1072&#1109 written &#959f such doubts. Ergen h&#1072&#1109 n&#1077&#1110th&#1077r confirmed n&#959r denied &#1072n&#1091 attempted grab [...]

  2. TMF Associates MSS blog » Good luck Charlie! said,

    September 25, 2012 at 5:25 am

    [...] be interested in MSS spectrum, given he is probably the only remaining credible possibility for the mystery LightSquared investor that many thought was Ergen earlier this year, and he has an existing relationship with Ergen in [...]

  3. TMF Associates MSS blog » LightSquared’s Mexican standoff… said,

    March 23, 2013 at 8:52 am

    [...] now Inmarsat won’t have to give up any spectrum at all to Mexico. It might also indicate why Carlos Slim was rumored to be interested in LightSquared, although given recent developments, Slim might now have bigger issues to worry about in [...]

  4. TMF Associates MSS blog » Is there a Sound Point to investing in LightSquared? said,

    April 5, 2013 at 4:01 pm

    [...] people appear to believe that Ergen is behind Sound Point’s investment, despite the doubts that were expressed by people close to the situation last May. The fact that the deal was apparently struck immediately after the end of Q1 (and therefore any [...]

  5. TMF Associates MSS blog » Very UnClearWire… said,

    May 5, 2013 at 8:11 pm

    [...] between Ergen and Slim is plausible (and indeed is something I’ve been writing about for the last year), using LightSquared’s spectrum as an alternative to Clearwire makes little sense (even if [...]

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