Carl Icahn acquires USD300m LightSquared debt; is troubled LTE start-up close to collapse?

23 Jan 2012

Self-styled ‘corporate raider’ Carl Icahn has reportedly purchased USD300 million worth of debt from LightSquared partner Farallon Capital Management, following a value drop last year. The move could potentially position Icahn as a controlling force behind LightSquared, meaning that the open access Long Term Evolution (LTE) start-up could find itself navigated away from Falcone’s initial vision, towards a more profitable direction. According to TeleGeography’s GlobalComms Database, LightSquared plans to build out a nationwide hybrid LTE network using terrestrial and satellite networks to provide nationwide coverage. It will use non-traditional spectrum (1.4GHz and 1.6GHz bands) and will sell wholesale access to the network. The company has USD4.64 billion worth of spectrum assets, alongside a series of licences permitting it to operate in various broadcast spectrums – valued at around USD2.44 billion. The licences are likely to be of particular interest to the hedge fund managers currently in the process of acquiring LightSquared’s debt.

LightSquared, which is largely bankrolled by billionaire Philip Falcone’s Harbinger Capital hedge fund, already faces a serious obstacle in winning regulatory approval to launch its network, as it struggles to satisfactorily prove to the Federal Communications Commission (FCC) that it can eliminate interference problems with GPS satellite navigation devices and aircraft flight safety equipment. Further, according to a recent financial statement obtained by Reuters last year, the company may be running out of cash. Responding to the latter question last week, LightSquared spokesman Terry Neal told Bloomberg that the start-up has ‘enough money to last us several quarters’.

Over the years Carl Icahn has taken substantial or controlling positions in a number of corporations, including: Texaco, Western Union, Marvel Comics, Revlon, Blockbuster, Time Warner and Motorola. He is estimated to be one of the top 25 richest men in the United States. When quizzed on Icahn’s recent actions, long-time rival Falcone told Reuters: ‘Carl is certainly entitled to his opinion, as I am entitled to disagree with it’.

United States, Ligado Networks (formerly LightSquared)