LightSquared near $2 billion a year Sprint deal: sources
NEW YORK (Reuters) - Sprint Nextel Corp is close to completing a $2 billion-a-year network sharing agreement with hedge fund billionaire Phil Falcone's LightSquared telecommunications venture, sources familiar with the matter said on Wednesday.
Under the proposed agreement, LightSquared would pay $2 billion a year to rent space on Sprint's network to launch its own high-speed wireless services, according to a person who asked not to be named because the details are not yet public.
The eight-year contract would allow LightSquared, a start-up backed by Falcone's Harbinger Capital Partners, to use Sprint's network equipment on 40,000 cellular broadcast towers along with its own wireless airwaves, to launch its own high-speed service.
LightSquared would basically be a tenant on Sprint's network, according to the person familiar with the details of the plan.
"Two billion dollars a year would be in the right ballpark for a network-sharing agreement" said a second person familiar with the matter, but that person could not comment on the duration of the contract.
A spokeswoman for LightSquared declined to comment. A Sprint representative was not immediately available for a comment.
The agreement, on which the telecommunications industry has speculated for months, would help Sprint pay for a $5 billion network modernization plan it announced late last year.
It would also reduce LightSquared's expenses for launching its service compared with the cost of building its own network.
Sprint had said it would announce more details related to its network plans around midyear.
But one looming question is where LightSquared, which has openly talked about filing for an initial public offering, would come up with the $2 billion in annual payments.
The company, which has sold more than $1 billion in high-yield debt, has received a $3 billion equity infusion from Falcone's Harbinger funds.
LightSquared currently has about $1 billion in cash on its books and could raise new capital to pay for the Sprint contract, a person familiar said but did not give specifics.
- Obama condemns killing of reporter, U.S. hits militants in Iraq |
- U.S. military failed in rescue attempt for journalist Foley |
- Hamas says Israel killed three top Gaza commanders |
- Indian firms tool up for defense orders on Modi's 'buy India' pledge
- Thai junta leader appointed PM by hand-picked parliament