Nokia Siemens inks USD7 billion deal to build LightSquared LTE network

21 Jul 2010

Nokia Siemens Networks (NSN) has won a USD7 billion, eight-year deal to build the new LightSquared Long Term Evolution (LTE) open-access mobile network in the US. The deal, funded by Harbinger Capital, a New York investment firm with extensive telecommunications holdings, will see NSN build a terrestrial wireless network integrated with satellite capacity which will provide wholesale backhaul services across the States. The new venture will utilise the mobile high speed internet service developed by NSN and rely on the satellite and terrestrial spectrum that Harbinger acquired through its purchase of SkyTerra earlier this year.

The announcement marks the unveiling of the LightSquared brand. According to the terms of its licence the LightSquared network must achieve coverage of 100 million people by the end of 2012, 145 million people by the end of 2013 and 260 million people (not including satellite coverage) by the end of 2015. LightSquared CEO Sanjiv Ahuja (formerly CEO of Orange) has said that the company plans to launch wholesale services in its first markets by mid-2011, and hopes to have 92% coverage by 2015.

As a condition of the FCC’s approval of Harbinger’s USD280 million acquisition of SkyTerra, LightSquared cannot lease spectrum on its network to AT&T or Verizon without prior permission from the agency. Of its rivals, Clearwire has already launched its own 4G WiMAX network and already covers 51 million people in 44 cities across the country, whilst Verizon and AT&T are planning their own 4G launches by the end of 2010. Harbinger’s agreement with NSN is subject to approval from both companies’ boards. The deal includes network design, equipment manufacturing and installation of some 40,000 wireless base stations, as well as network operations and maintenance. NSN is pushing hard in the US market: on Monday it agreed to pay USD1.2 billion to acquire the majority of Motorola’s network equipment business in the country.

Regarding LightSquared’s likely wholesale customers, TeleGeography’s GlobalComms Database notes that in May this year T-Mobile USA’s parent Deutsche Telekom was in partnership talks with Harbinger to rent capacity on the new LTE network. Other potential strategic investors in the project reportedly include Qwest Communications and SK Holdings, whilst Harbinger also holds a minority stake in CDMA-based mobile operator Leap Wireless. Furthermore, Clearwire is understood to be weighing up the option of entering the LTE market via a wholesale deal with LightSquared.