LightSquared obtains USD750 million loan; SK Telecom prepared to invest USD100 million

21 Sep 2010

LightSquared, the USD7 billion Long Term Evolution (LTE) open-access mobile network that will utilise satellite spectrum acquired by New York investment firm Harbinger Capital, has obtained a four-year USD750 million loan from UBS, reports Bloomberg. The loan will reportedly be secured by assets and subsidiaries belonging to LightSquared, Bloomberg suggests, citing two unnamed sources. In July 2010 LightSquared announced that it had secured USD1.75 billion in initial funding commitments, although analysts have estimated that LightSquared needs about USD5 billion to build out the network. The company, which has access to 59MHz of spectrum, has said its network will consist of around 40,000 cellular base stations covering 92% of the US population by 2015. LightSquared is planning initial LTE trials in Baltimore, Denver, Las Vegas and Phoenix, with commercial launches planned for the third quarter of 2011.

In related news, South Korean cellco SK Telecom has claimed that it is considering investing approximately USD100 million in LightSquared’s network. An SK Telecom spokesperson confirmed that talks are underway, but terms have yet to be agreed. The investment is designed to put into practice SK Telecom’s IPE (Industry Productivity Enhancement) business model, which is tailored to fit overseas markets. The mobile operator’s previous attempt to expand in the US through a joint venture with Earthlink failed. In June 2008, SK Telecom agreed to sell its unprofitable US mobile unit, Helio, for USD39 million in stock to Virgin Mobile USA, which was subsequently acquired by Sprint Nextel.