Wednesday, July 28, 2010

LightSquared LTE ambition, will it see the light?

Harbinger Capital Partner, a New York private equity firm plans to build an open Multibillion dollar wholesale 4G wireless network that will cover most of the USA by 2015. Just couple of days back the company launched the new venture, called LightSquared. According to industry sources, the overall cost to build the entire network will be between $6-10 billion. From a funding standpoint, Harbinger has secured $1.75 billion in debt and equity financing . The new financing adds to the $2.9 billion already contributed to LightSqaured. The dream is BIG. The folks running the show at LightSquared are no newbie’s. These are veterans’ in the Telco world and have run multibillion dollar networks in the past. However building an entire wireless network from scratch is a stretch and many folks doubt( here and here) if this is ever going to be become a reality. There are lot of hurdles from financial and implementation standpoint. In addition, as per FCC guidelines, LightSquared needs to cover 100 million people by end of 2012. Other operators are very aggressive with respect to 4G rollout. So competition is gone be stiff.

The clear winner out of this whole deal is Nokia Siemens, which signed an 8-year agreement worth $7 billion to deploy, install, operate and maintain LightSquared network. This will give Nokia Siemens a big boost to its ambition of becoming one of the Key Vendors for North American operators. The recent acquisition of Motorola wireless infrastructure business also bolsters its entry into most of the North American operator accounts.

Here are some highlights of the LightSquared announcement:
• Nokia Siemens Networks signs an 8-year agreement worth $7 billion to deploy, install, operate, and maintain LightSquared network
• First-ever wholesale nationwide 4G-LTE wireless broadband network integrated with satellite coverage allows partners to offer terrestrial-only, satellite-only, or integrated satellite-terrestrial services to their end users
• Telecommunications luminary Sanjiv Ahuja becomes Chairman and CEO, joined by a seasoned management team
• First truly open and net neutral wireless network spurring the development of new wireless devices, applications, and services
• Unique wholesale-only business model avoids conflict of interest with customers
• LightSquared is announcing up to $1.75 billion in additional debt and equity financing
• LightSquared network build-out anticipated to generate more than 100,000 direct and indirect private sector jobs within five years

Only time will tell if Harbinger will be able to execute its grand ambition of providing a wholesale-only nationwide 4G-LTE network. Stay tuned.

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