LightSquared pays Inmarsat bill, suspends spectrum deal
LightSquared has put the brakes on a deal that gave it additional spectrum for its stalled wireless network, which is mired by problems with GPS interference.
The company said today it will suspend the second phase of its arrangement with U.K. satellite provider Inmarsat until March 31, 2014. LightSquared will not have to make any payments to Inmarsat while the deal is on hold, including a past-due $29.6 million bill due three weeks ago.
LightSquared made restitution on the outstanding bill with a $56.25 million payment and renegotiated another bill due April 4.
"This new agreement allows LightSquared an opportunity to focus its efforts on obtaining the necessary regulatory approvals," said Doug Smith, LightSquared’s interim chief operating officer and chief network officer.
The payments and the amended contract pull LightSquared out of default on its payments to Inmarsat.
LightSquared withheld a $56.25 million payment to Inmarsat in February, saying there were "several matters that require resolution" before it needed to pay Inmarsat for the first part of their arrangement.
In return, Inmarsat handed LightSquared a default notice that gave it 60 days to make the missed payment. LightSquared also skipped a $29.6 million payment due at the end of March, a bill voided by the new terms between the two companies.
LightSquared planned to use Inmarsat's spectrum instead of its own after tests last summer showed signals in LightSquared's bands knocked out GPS service, located in adjacent airwaves. Inmarsat was set to receive $337.5 million under the first phase of the project and another $115 million each year under the second phase.
Inmarsat said today that LightSquared's network "remains a substantive revenue opportunity," but it is not clear whether LightSquared will be able to launch its service in the future.
Inmarsat's spectrum is located farther away from GPS bands, and LightSquared said distancing its transmissions would address the interference problem. But another round of government tests found that LightSquared's transmissions still had a harmful effect on GPS.
The failure to come up with a fix later prompted the FCC to revoke LightSquared's waiver for the service and bar it from using its satellite spectrum for ground-based wireless service, putting an end to its LTE ambitions.
LightSquared has vowed to move forward with its LTE network but has few options. Its hiring of high-profile lawyers has led to speculation that the company will pursue legal recourse, but it has yet to file a suit against the government.