Struggling LightSquared seeks DoD spectrum swap; hedge fund investors line up to sue Falcone

21 Feb 2012

US billionaire Philip Falcone, the man behind the ill-fated USD7 billion LightSquared open-access Long Term Evolution (LTE) venture, is reportedly seeking to swap spectrum owned by the wireless start-up with alternative frequencies controlled by the US Department of Defense, in an effort to salvage his investment, Bloomberg reports. Last week LightSquared, which planned to build out a nationwide hybrid LTE network using terrestrial and satellite networks to provide nationwide coverage, saw its plans overruled by the Federal Communications Commission (FCC), which declared that the non-traditional spectrum in the 1.4GHz and 1.6GHz bands interfered with GPS satellite navigation devices and aircraft flight safety equipment.

In related news, Dow Jones Newswires reports that investors in Falcone’s Harbinger Capital Partners hedge fund have sued both the fund and Falcone himself, arguing that the ‘all in’ investment in LightSquared squandered billions of dollars. The lawsuit, which was filed in the Southern District of New York, contends that Falcone made ‘deceptive and misleading statements’ by not disclosing that he intended to form the wireless start-up. Harbinger and Falcone ‘knew from the outset, or were reckless in failing to know, that LightSquared’s technology interfered with GPS systems,’ according to the suit. As a result investors ‘stand to lose substantially all of the value of their investments’. The lawsuit contends that, by ploughing around 60% of its money into LightSquared, Harbinger ‘implemented a very different investment strategy, which bore little or no resemblance to the investment strategy described in the offering materials.’

United States, Ligado Networks (formerly LightSquared)