04.29.11
Posted in Financials, LightSquared, Operators, Spectrum at 4:35 pm by timfarrar
Intriguingly, yesterday’s Reuters article about Harbinger noted that at the end of 2010 Harbinger only controlled “roughly 80 percent of the wireless telecom company’s shares”. This raises the obvious question of who controls the other 20%?
Clearly, some of these shares might have been offered to LightSquared’s new management team as an incentive, but that can’t account for the difference between the 100% of the equity that Harbinger acquired in March 2010 and the 80% reported as of the end of the year. Did Harbinger manage to offload some of its equity stake in LightSquared last year (as it was reported to be trying to do in July)? Could this account for some of the “$2 billion in equity and debt proceeds and in commitments” that LightSquared highlighted in a press release last October?
Who are the potential candidates? I’ve heard various names, but one possibility might be Soros Fund Management, which, according to a November 2010 Wall Street Journal article, “during the past year became a significant new investor” (whether this was in Harbinger or in LightSquared is not explicitly stated in the article). Of course, there may very well be other investors as well.
Even more importantly, how much did the other investor(s) pay for what is presumably a near 20% stake? It appears that not all of the $2B in commitments that LightSquared cited in October 2010 actually materialized (presumably the difference is Harbinger’s “$250 million unfunded commitment to LightSquared“), but I’ve assumed in the past that it included both the $850M October 2010 first lien debt and the $400M July 2010 UBS loan. However, rather than Harbinger converting its original (majority $430M holding of) LightSquared’s first lien debt into equity as part of the October 2010 refinancing (as it had previously indicated), it seems that Harbinger instead retained an unfunded $250M commitment at that stage, allowing it finally to take a limited amount of money off the table.
As of February 2011, LightSquared indicated that in fact it had actually raised “about $1.75B in debt and equity” (the same figure as given in late September, which refers specifically to $1.75B of debt and equity from “outside investors”), before increasing this to “over $2 billion” when the $586M first lien add-on was completed later that month. That would imply that the new equity investment might have been about $500M for a near 20% stake in LightSquared (i.e. $1.75B minus $850M and $400M) which would certainly fit fairly well with Harbinger’s internal valuation of about $3B for its own 80% LightSquared stake (“about half” of the $6 billion fund’s assets according to Reuters). However, it is slightly puzzling that Harbinger still said only that it had raised “over $2 billion” in February (rather than the $2.3B+ that would have been implied by adding $586M to $1.75B). Was some (half?) of the new outside equity either redeemed or converted to first lien debt in February, or is Harbinger just trying to avoid giving an exact figure for how much it has raised?
Of course, if LightSquared really is serious about pursuing an IPO “as early as this summer”, then all of this detail should become much clearer. However, it appears from Sprint’s results call this week that the Network Vision deployment is being delayed until the fourth quarter. That may imply that decision point on a network sharing agreement with LightSquared will also be delayed, presumably until after the results of the GPS interference testing are known in mid June. If Sprint is concerned about whether LightSquared’s spectrum provides adequate security for LightSquared’s commitments under a network sharing agreement, then that would certainly be logical, especially if Sprint views LightSquared (cynically) as an opportunity to boost its spectrum resources at low cost (after a default), rather than as a viable long term supplier of wholesale capacity. Nevertheless, if the first lien debtholders refuse to allow Sprint to pre-empt their claims, then LightSquared might have to move forward with an early (and substantial) IPO to give Sprint the security of more cash in the bank, but otherwise we might not know much more about LightSquared’s financial position for some time to come.
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04.11.11
Posted in Financials, LightSquared, Operators, Spectrum at 2:36 pm by timfarrar
Last week, I suggested that LightSquared’s most plausible path to a network sharing deal with Sprint would involve signing a multi-billion dollar take-or-pay capacity contract and using this to raise $1B+ of new equity. It appears that LightSquared is definitely exploring a possible equity raise through an IPO, although that would require it to strike a capacity deal first, and the only obvious large deal at present is via paying part of its obligations to Sprint in kind.
Of course that could leave Sprint in the uncomfortable position of being the only potential financial safety net for both LightSquared and Clearwire, precisely the issue which led me to speculate that Sprint might be better off choosing to partner with only one of the two companies. At this point in time, Sprint only gains an advantage in partnering with both LightSquared and Clearwire if it can either be sure that LightSquared will be solvent for long enough to (more than) offset the costs that Sprint would incur in a network sharing agreement, or if LightSquared can provide other adequate security for these obligations. Given LightSquared’s ongoing payments to Inmarsat, and the costs incurred by Sprint in a network sharing buildout, then (under the “deal” modeled by Credit Suisse) that might require new fundraising or guarantees (in addition to LightSquared’s existing cash) of perhaps $1B or more. If LightSquared could successfully execute an IPO then that would presumably help matters significantly, though it is far from clear whether raising anything close to $1B is feasible at this point.
Otherwise, I assume Sprint would be looking for other LightSquared or Harbinger assets to secure LightSquared’s obligations. I’m told that one possibility that has been floated is for Sprint to take a first lien position in LightSquared’s spectrum assets, and subordinate the existing $1.5B of debt. That prospect would presumably be very unpopular with existing debtholders, who already have to face a $2B+ obligation to Inmarsat, associated with the Cooperation Agreement (without which half of LightSquared’s ATC spectrum would be forfeited). Alternatively, would Harbinger offer some sort of guarantee secured against its other hedge fund assets (like the $400M UBS loan last July) or even a personal guarantee from Mr. Falcone?
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04.07.11
Posted in Financials, LightSquared, Operators, Spectrum at 10:17 am by timfarrar
After a difficult March, when Harbinger failed to buy DBSD in partnership with MetroPCS, and Sprint decided not to make the expected announcement of a network sharing agreement at CTIA, it is now becoming possible to discern how LightSquared might plan to move forward.
As I noted previously, the key challenge for LightSquared at this point in time is to persuade Sprint that it should undertake a network sharing arrangement, rather than Sprint focusing solely on its partnership with Clearwire. This will only happen if LightSquared can convince Sprint of its ability to bring substantial funding to the table, which would reduce the cost of Sprint’s Network Vision buildout, and mitigate the risk of leaving Sprint holding the bag for increased tower lease costs that would result from adding the LightSquared frequencies. However, LightSquared has already raised $1.5B of first lien debt, and so any further fundraising would have to be subordinated to that, and would therefore likely have to rely on a take-or-pay capacity commitment from a partner.
As a result, I think the four steps LightSquared will now need to execute, in order to move forward, are as follows:
1) Strike a multi-billion dollar take-or-pay contract with one or more major “anchor tenant” customers
2) Raise $1B+ of additional external equity investments based on the take-or-pay commitment (perhaps even including an IPO???)
3) Convince Sprint that the network sharing agreement is therefore a better deal than going with Clearwire alone
4) Sign a contract with Ericsson for buildout of the network (replacing NSN).
Of course all of these steps are fraught with risk and need to be executed simultaneously, since they are mutually interdependent. Some of the most obvious risks include:
a) How solid can the take-or-pay contract be when there are still interference risks to be resolved?
b) Does the LightSquared equity have any value, when there is $1.5B of first lien debt plus a $2B+ spectrum lease/rebanding commitment to Inmarsat ahead of the equity?
c) Would it be better for Sprint from a regulatory point of view if (one of) LightSquared or Clearwire folded?
However, the overarching issue is where such a huge take-or-pay contract would come from. Could it one of the “top three global consumer electronics companies” that LightSquared claimed to be in “advanced talks” with (these 3 are Samsung, HP and Sony)? However, “connections for services such as wireless photo uploads and wireless multiplayer gaming” seem unlikely to generate that much money. Similarly the deal that LightSquared “has already signed…with a maker of tablet computers and smartphones that could start using LightSquared’s network as soon as the fourth quarter” would require an enormous commitment to come close to billions of dollars in value, which is hard to envisage while the LightSquared network has limited national coverage. If neither of these is a realistic option for more than a fraction of the capacity contracts that are needed, then that brings us back to wireless operators or new entrants – MetroPCS or Leap? One of the potential partners that has been talked about in the past? Who knows? But with T-Mobile out of the picture, the list of possible anchor tenants is pretty short, and both Sprint and skeptical journalists will need to see some concrete progress on LightSquared’s part fairly soon, amounting to more than just a roaming or sales agreement with no hard volume commitments.
UPDATE: Credit Suisse is now suggesting that LightSquared would pay 50% of its network sharing costs to Sprint in capacity, which clearly represents multiple billions of dollars of capacity over time. However, in order to convince Sprint to move forward, I think LightSquared’s deals would still have to include major capacity commitments from one or more third parties, so that it can raise the money to pay for the hosting agreement with Sprint. If LightSquared paid $500M upfront in cash, plus $1200 per month per base station in cash for 45,000 base stations as Credit Suisse suggests, it would need to pay Sprint about $650M per year in cash for these hosting fees once the network was fully rolled out, and in excess of a billion dollars in cash in total over the next three years before it can generate much revenue. Given that this does not include LightSquared’s other core network development and operating costs (including the ongoing payments to Inmarsat), and as Credit Suisse admits, Sprint would spend an extra $1.2B between LightSquared and Clearwire before it started to make money from the hosting agreement (and is liable for ongoing payments to tower companies of $700 per tower per month), I think Sprint will want to see that LightSquared is able to fund at the very least the next several years of payments before committing to a deal. This clearly puts the onus back on LightSquared to secure substantial additional capacity commitments from companies other than Sprint, and raise significant equity funding ($1B+) in the very near future.
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03.28.11
Posted in Financials, LightSquared, Operators, Regulatory, Spectrum at 8:23 am by timfarrar
In recent days, the LightSquared PR machine has moved into ever higher gear, in an attempt to persuade Sprint that it should choose LightSquared over Clearwire. Given the frantic pace of announcements, I think that Sprint’s decision may come as soon as the next few weeks, in an attempt to disrupt the AT&T/T-Mobile merger, which was partly justified by citing the competition from Clearwire and LightSquared. However, it does feel a bit like something out of Monty Python, when LightSquared claim that the disappearance of their supposed deals with Sprint and MetroPCS is just a flesh wound.
Now we have another Monty Python scene coming into view, as the House of Representative’s Committee on Energy and Commerce moves ahead with an investigation into the FCC and their “management of commercial spectrum”. As Dave Burstein reports, there are clearly some senior staff at the FCC who share my concern about whether a “spectrum crisis” is being “manufactured”.
However, with not only the FCC Chairman’s reputation, but also the fate of the AT&T/T-Mobile merger, riding on the perpetuation of a “spectrum crisis” (not to mention billions of dollars of projected future budget revenues), it seems likely that the investigation will be more focused on political point scoring than on a serious debate about future spectrum demand.
Nevertheless, if Sprint’s upcoming decision leads to the failure of either LightSquared or Clearwire, then that really ought to prompt some hard questions about whether there actually is a spectrum crisis. Let’s hope that Congress’s investigators have more analytical resources at their disposal than “fear, surprise, ruthless efficiency…and nice red uniforms”.
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03.25.11
Posted in Financials, LightSquared, Operators, Regulatory, Spectrum at 9:30 am by timfarrar
It looks to me ever more likely in the wake of the AT&T/T-Mobile deal that Sprint will soon have to choose to back either Clearwire or LightSquared, but not both. LightSquared is doing its best to talk up the idea that Clearwire’s customers are going to jump ship, having announced a deal with Best Buy with a “trial” of its LTE service starting in the first quarter of 2012, and now suggesting that it is “in discussions” with Time Warner Cable for a major deal, despite that company’s “not very impressive” results with Clearwire and TWC stating that it is “trying to spend not too much money while we are [exploring whether packaging wireless data with our wireline offerings is something that consumers want]“.
Neither of the deals that LightSquared has announced this week will generate very much revenue (I estimate a few tens of millions of dollars per year at best from Leap and rather less than that from Best Buy) and so most people are looking towards a LightSquared network sharing agreement with Sprint to show how LightSquared will move forward. This is hardly surprising given that the previous MoU with Nokia Siemens Networks appears to have fallen apart, and there is still no news about a partnership with MetroPCS on the 2GHz MSS spectrum.
Before the AT&T/T-Mobile deal it seemed that Sprint would try and have it both ways, continuing to work with Clearwire, and hoping that a spectrum sale or investment from T-Mobile would solve Clearwire’s funding challenges, while signing a network sharing agreement with LightSquared to offset some of its network upgrade costs and allow it to play Clearwire off against LightSquared when it came to negotiating wholesale bandwidth pricing.
However, it now looks more likely that Sprint will have to choose between Clearwire and LightSquared, because the two companies are competing for the same diminished pool of potential deals, and as Strategy Analytics asserts “there are probably too many 4G wholesale networks going after too few large wholesale customers”.
Despite the problems that Clearwire is facing, it has spent at least $5B so far on rolling out a network, mostly using other people’s money, and has a commercial network covering 120M people with capacity that can be sold today. From that perspective alone, it would be much less of a risk for Sprint to choose Clearwire over LightSquared. As Walter Piecyk of BTIG put it with regard to the “talks” between LightSquared and TWC: “Signing a roaming deal with LightSquared is kind of like planning a trip that goes over the bridge to nowhere. There is currently no network to use, there are material interference issues to resolve and then there is the small detail of coming up with $14 billion of cash. Good luck.”
Given these challenges, a decision by Sprint that provided LightSquared with a path to move forward would cast its already difficult relationship with Clearwire in an even more negative light. Similarly, if Sprint decides to back Clearwire as its primary provider of 4G service, it is hard to see why Sprint would expose itself to having to put up even more investment if Clearwire’s future revenue growth is impacted by competition from LightSquared. Given that AT&T has used the availability of both Clearwire and LightSquared’s networks to support its assertion that the mobile broadband market is highly competitive, the AT&T/T-Mobile merger might also be less likely to be approved, if one or other of Clearwire and LightSquared was to fail in the near term. As a result, I think that whichever choice Sprint makes could be fatal for the company it leaves on the sidelines, and ironically Sprint might even benefit from that outcome.
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03.22.11
Posted in Financials, ICO/DBSD, LightSquared, Operators, Spectrum, TerreStar at 8:48 am by timfarrar
As I noted last month, I found it very surprising that LightSquared chose to announce that it had “five customers” for wholesale fourth-generation service, consisting of “a national retailer, a device manufacturer, one Web site, and two carriers”, but declined to name any of them. Over the last five weeks, two of these names have emerged – Open Range Communications and today Leap Wireless. However, LightSquared is still to reveal the “major retailer that it will name before the end of March”.
Just like the deal with Open Range ten days ago, when everyone thought LightSquared would announce a major deal with MetroPCS, today’s release also seems to be a major let down. LightSquared had promised everyone that it had a network sharing agreement with Sprint to announce at CTIA. Perhaps this will still be announced tomorrow, but that would be a rather peculiar PR strategy, and PR is one thing that LightSquared has been very effective at. Given the complex array of choices now facing Sprint, as it decides how to respond to the AT&T/T-Mobile deal, it seems more likely that Sprint has taken a step back to reconsider what happens next.
As I understand it, the Leap Wireless roaming deal was agreed six months ago, leading LightSquared to claim at the SATCON conference in New York in October that it had already secured a 3G roaming partner to “augment” its network coverage. It also hardly seems likely to generate a meaningful amount of revenue for LightSquared, especially if it is a reciprocal roaming agreement. If 30% of Leap’s 5.5M customers opted for 4G roaming, and the net revenue flow to LightSquared was $2 per sub per month, then this would only generate about $40M of revenues per year for LightSquared, a drop in the bucket compared to its planned $14B investment.
The second major LightSquared announcement that was expected at CTIA was a network infrastructure deal with Ericsson. Its therefore surprising that an interview with a LightSquared executive has been published today on Telecoms.com, once again talking about LightSquared’s “deal” with Nokia Siemens Networks. As an aside, I’m told that the reason it is always referred to as a “deal” or an “agreement” with NSN, is because the original MoU, signed last July, has never been converted into a formal contract.
In my previous post, I wondered “which of DBSD/TerreStar, Clearwire and LightSquared will ultimately turn out to be the good, the bad and the ugly”. Given the results of the DBSD bankruptcy auction, DBSD certainly turned out to be good for its investors. Now we just have to wait and see what happens with TerreStar, Clearwire and LightSquared.
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03.20.11
Posted in Financials, LightSquared, Operators, Regulatory, Spectrum at 4:39 pm by timfarrar
There are known knowns; there are things we know we know.
We also know there are known unknowns;
that is to say we know there are some things we do not know.
But there are also unknown unknowns – the ones we don’t know we don’t know.
As Donald Rumsfeld’s famous speech pointed out, often the most important issues are not the known unknowns, but the unknown unknowns. There are many known unknowns in LightSquared’s plan, such as the eventual impact of GPS interference, and where they will find funding for the network buildout.
However, the ultimate outcome may in fact be dictated by things we didn’t know we didn’t know, like the negotiations that resulted in today’s deal for AT&T to buy T-Mobile. Although some observers are suggesting this would be bad for LightSquared, in fact I think its much better for them than the alternative, of Sprint buying T-Mobile, which would hardly have left much room for a new entrant 4G network. In addition, my understanding is that discussions between LightSquared and T-Mobile have not been particularly active for quite a long time.
Although the AT&T/T-Mobile deal will undoubtedly overshadow this week’s CTIA conference, it will force Sprint to respond in some way fairly soon. Sprint obviously will be in a better negotiating position vs both Clearwire and LightSquared, but if those negotiations are already at an advanced stage, as most people assume, the outcome may not change too much.
From my point of view, one of the most interesting facts to come out of the AT&T announcement is that AT&T’s expectations are for mobile data growth of 8 to 10 times between 2010 and 2015, very similar to (though slightly lower than) T-Mobile’s January 2011 projection of 60% data growth per year from 2010 to 2014. Though AT&T trumpets this statistic as evidence of the growing demand for spectrum, when two of the biggest carriers agree that growth will be far slower than the FCC’s October 2010 spectrum demand model (which was already subject to significant errors), it certainly demonstrates how out of touch the FCC Chairman was this week, when he highlighted Cisco’s projection of “a nearly 60X increase [in data traffic] between 2009 and 2015″ as evidence that “the looming spectrum shortage is real”.
In the end, as Secretary Rumsfeld acknowledged, political decisions are made on the basis of incomplete and sometimes even incorrect evidence. To date, the FCC Chairman’s firm belief in a “spectrum crunch” has benefited LightSquared substantially, even if the reality is more likely something very different. However, as Secretary Rumsfeld found out, if momentous decisions are based on a faulty hypothesis, there will usually be a pretty significant backlash once the truth is revealed.
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03.16.11
Posted in Financials, ICO/DBSD, LightSquared, Operators, Regulatory, Spectrum at 7:20 pm by timfarrar
Back in the 1990s, the oft-repeated mantra from proponents of the Iridium, Globalstar and ICO projects, when asked where they would find subscribers and investors, was “build it and they will come“. Unfortunately, this Field of Dreams approach didn’t quite work out, when between them these projects lost over $12B of investors’ money.
It now looks like Phil Falcone may end up playing the role of another character from the film, and an even better known resident of Chisholm, Minnesota, Archibald “Moonlight” Graham, whose claim to fame is that he never managed to get a chance to bat in his only appearance in Major League Baseball.
At Satellite 2011 today, the consensus of industry observers and regulatory advisers alike was that GPS interference issues are likely to render much of LightSquared’s L-band spectrum unusable for years to come, as I noted last night. As a result, it is very hard to see where we go from here in terms of LightSquared’s network buildout, even if the plan was fundable.
UPDATE: LightSquared appears to be hinting that it plans to announce a network sharing deal with Sprint next week at CTIA. Though this would be an interesting development, it is a far cry from the planned deal with MetroPCS, which could have potentially ensured an ATC buildout in the 2GHz band. LightSquared would still have to raise the money to fund the buildout, and this will still cost billions of dollars, not least because Sprint only has the right to deploy majority owned spectrum (such as from Clearwire) on its leased towers (unless new agreements are struck with the tower owners). If GPS interference issues render much of LightSquared’s spectrum unusable, it will also be much harder to offer adequate security for any new fundraising.
After Harbinger’s unsuccessful attempt to gain control of DBSD, it may now prove difficult if not impossible to access the 2GHz spectrum. With MetroPCS apparently also unwilling to publicly announce its partnership with Harbinger, it appears more plausible that MetroPCS would decide to team up with DISH than to continue the pursuit of TerreStar in conjunction with Harbinger. As a result, it seems ever more probable that there may never be a LightSquared terrestrial network, and Mr. Falcone may have lost his chance to bat in the major league of mobile operators.
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03.15.11
Posted in Financials, ICO/DBSD, LightSquared, Operators, Regulatory, Spectrum, TerreStar at 8:24 pm by timfarrar
Yesterday at Satellite 2011, Harbinger’s bankers at UBS expressed enormous confidence that LightSquared was “ahead of the pack” in securing partners and in its future prospects. Given the ongoing auction for DBSD, I was not alone in finding that confidence somewhat surprising. However, the document filed by DBSD this morning summarizing the status and results of the marketing process helps to explain why that was the case. MetroPCS (referred to as the Alternative Bidder) had filed a tentative bid last Thursday which was “contingent on the completion of additional due diligence and securing sufficient financing” (because it had been unable to reach an agreement with Harbinger and Solus). This was the point at which LightSquared were forced to announce their deal with Open Range instead of the intended partnership with MetroPCS. However, on Sunday March 13, MetroPCS reached an agreement with Harbinger and Solus to jointly fund the bid, allowing the three companies to make a definitive offer ultimately amounting to $1.475B. This supposed “knock-out” bid was a major factor in allowing UBS to travel to Washington DC on Monday and advertise their confidence in LightSquared.
Unfortunately for Harbinger, late last night DISH made a higher bid of $1.485B for DBSD and secured the support of parent company ICO Global, knocking Harbinger out of the running (although there remains the remote possibility of a further bid). As a result, the plans of LightSquared are now subject to considerable confusion – will it focus on the L-band or will it instead bid for TerreStar?
As I noted last week, there are acknowledged problems with GPS interference in the L-band, which is apparently what forced Harbinger to bid for DBSD. I’m now told that this interference issue may well render LightSquared’s current L-band spectrum (as available under the Phase 1 agreement with Inmarsat) largely unusable in a terrestrial network for many years to come, until filters are fitted as a matter of course to GPS devices (assuming the FCC decides to mandate this). In addition, LightSquared’s Phase 2 L-band spectrum (leased from Inmarsat), which may have less interference problems, will not be available until July 2013. However, TerreStar’s spectrum also has its problems, not least the potential need to negotiate an agreement with DISH as the owner of DBSD for a joint approach to utilize the 2GHz spectrum.
UPDATE: As part of its March 15 GPS Working Group documentation, LightSquared has published full details of its terrestrial spectrum band plans. The Phase 0 spectrum (1 paired 5MHz channel) has its downlink at 1550.2-1555.2MHz. The Phase 1A plan adds another channel with a downlink at 1526.3-1531.2MHz and the Phase 2 plan extends both channels to 2x10MHz, with downlinks at 1526-1536MHz and 1545.2-1555.2MHz. As such, though LightSquared is likely unable to use the Phase 0 spectrum, it might be able to use the second (lower) channel under the Phase 1A plan without causing substantial interference to GPS. The Phase 1A spectrum is expected to be available in February 2012, although under the original Cooperation Agreement a “reasonable delay” of up to 9 months could be added to this date. Whether this timeline for availability is sufficient to support a buildout is unclear.
In the near term, what may overshadow these issues is the status of the $586M loan that LightSquared secured from UBS and JP Morgan in mid February. At the time it was indicated that this loan would bring LightSquared’s available cash up to “about $1 billion”, something that is very important in enabling LightSquared not just to go forward with its planned network buildout, but also to keep paying Inmarsat for rebanding of the L-band spectrum. I had assumed that much of this loan would be spent on the DBSD bid, otherwise it is hard to see why LightSquared would access money at this stage when only a few days before LightSquared had indicated that it was “not going to raise more [money] in the short term”).
The question now is whether this loan has been drawn down and whether LightSquared will be able to continue to spend the money on the L-band rebanding and future network buildout, in view of the challenges the company may face in utilizing its L-band spectrum in the near term. If there are any conditions under which the loan could be recalled, then UBS will have to decide whether its confidence in LightSquared still remains as high as on Monday, or if its exposure is now of more concern. With LightSquared’s current cash burn rate somewhere in excess of $100M per quarter (excluding any terrestrial network buildout costs), this could significantly impact how much time LightSquared has available to secure a partnership.
Next week, LightSquared has indicated it plans to announce “significant news” at CTIA. Will this give some indication of where the company goes from here? Is there a deal with Sprint, T-Mobile or some other partner to announce? Will further disclosure of a partnership with MetroPCS take place, or was that deal limited to a potential 2GHz venture? Many questions remain unanswered, but LightSquared will need to start providing some answers very soon, if it is to move forward with its plans, and meet its promises to the FCC.
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03.11.11
Posted in Financials, Globalstar, ICO/DBSD, LightSquared, Operators, Regulatory, Spectrum, TerreStar at 11:48 am by timfarrar
He came from a hardscrabble background, rising to prominence along with his flamboyant wife, who became a favorite of the tabloids. After raising hundreds of millions of dollars, his unstinting efforts to bring essential resources to millions of people in remote areas attracted the interest and favor of political leaders and government agencies alike.
No, its not the story of Phil Falcone, but the autobiography of Bob Geldof. After today’s announcement of a deal with Open Range, something that other MSS-ATC proponents openly scoffed at when Open Range signed its original deal with Globalstar, I’m also left asking “Is that it?”.
Its worth recalling that the prior spectrum lease contract between Open Range and Globalstar called for annual spectrum lease payments which in the first six years were projected to range from $0.6M to $10.3M, something that is little more than a Band Aid in the context of Harbinger’s $2.9B investment in LightSquared. I’m therefore left with the distinct impression that LightSquared intended to announce a much bigger deal with MetroPCS, as I suggested yesterday, but it has not yet been possible to reach agreement over a joint bid on the 2GHz MSS spectrum.
Given the pressure to reach a deal on any bid for the DBSD spectrum before the next hearing on Tuesday March 15, and DBSD’s intention to announce its preferred bidder the day before, we will have to wait and see if a MetroPCS deal can be struck over the next three days, or if Mr. Falcone will be the one left singing “I Don’t Like Mondays“.
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