LightSquared secures additional funding, triggers 'Phase 2' of re-banding

LightSquared took its first major step to fulfilling its promise of launching a nationwide, LTE-enabled wholesale wireless network announcing it had closed on a $850 million of debt funding from UBS AG. LightSquared said terms of the credit facility will be four years and non-callable on the first year.
LightSquared, which this summer announced a $7 billion deal with Nokia Siemens Networks to build and operate the LTE network, was operating with $1.75 billion in debt and equity financing obtained from parent company Harbinger Capital Partners and its affiliates.
To help further its deployment plans, LightSquared said it intends to accelerate a spectrum re-banding plan with Inmarsat plc that will provide the company with access to additional spectrum resources currently controlled by Inmarsat. The implementation of “Phase 2 of the Inmarsat Cooperation Agreement” is expected for the fourth quarter and will begin LightSquared’s annual spectrum lease payments.
LightSquared triggered Phase 1 of the agreement in mid-August that called for Inmarsat to begin re-banding its L-Band spectrum covering North America. LightSquared noted Phase 1 would require it to make payments totaling $337.5 million to Inmarsat over the duration of the transition. The plan was part of an agreement signed in late 2007 by Inmarsat and LightSquared’s predecessor companies SkyTerra Communications Inc. and Mobile Satellite Ventures L.P. Both companies were eventually acquired by Harbinger Capital Partners.
“By accelerating Phase 2 of the Inmarsat Cooperation Agreement, we will be able to utilize and deploy additional spectrum earlier than anticipated, further enhancing the capacity of LightSquared’s 4G-LTE-wholesale network,” noted Sanjiv Ahuja, chairman and CEO of LightSquared.
Once completed, the re-banding will provide LightSquared with spectrum it plans to use to begin building out a terrestrial/satellite hybrid network.
In addition LightSquared said it has signed its first wholesale agreements with an unnamed company and was “in advanced negotiations with numerous potential customers.” The company has said it plans to operate the network strictly through wholesale arrangements, a business case that has so far found mixed results in the mobile space.
LightSquared last week announced a partnership with the Indian Health Services federal agency to provide free phones and service for use in American Indian and Alaska Native communities through 2020. The plan calls for LightSquared to provide up to 2,000 phones for the project.