According to Bloomberg, 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, is close to striking a USD20 billion deal with Sprint Nextel to share network construction costs. The report, which cites two people familiar with the talks, indicates that the two operators are hoping to finalise terms on a 15 year contract which will allow LightSquared to roll out its network faster than expected. According to Bloomberg’s sources, who declined to be named, if the deal goes through, Sprint would initially receive as much as USD2 billion annually from LightSquared, to help pay for network equipment and construction costs. Subsequent payments would vary annually, based on the number of users on the LightSquared network and usage patterns. However, conflicting reports from Reuters indicate that the agreement with Sprint is more likely to cover an eight-year time-frame, rather than the 15 year period stated elsewhere.
The news comes just days after LightSquared reportedly held talks with AT&T regarding a deal to buy additional network capacity from the mobile carrier. Two people with knowledge of the discussions stressed that the initiative was still at a preliminary stage and may not result in a deal. Last week AT&T announced that it will launch commercial LTE services in its first five markets this summer, confirming long-standing industry rumours. The markets in question are Atlanta, Chicago, Dallas, Houston and San Antonio, with ‘ten or more’ additional markets slated for LTE connectivity by end-2011.