LightSquared will begin paying Inmarsat $115 million a year as it enters into the second phase of its plan to increase its U.S. spectrum holdings by re-banding Inmarsat's L-band spectrum.
The 2007 agreement outlines a two-part plan that uses Inmarsat's spectrum to increase LightSquared's contiguous spectrum holdings in North America in exchange for a series of payments to the satellite company. The spectrum deal was originally signed by Inmarsat and SkyTerra, which was later acquired by Harbinger Capital Partners for its LightSquared mobile broadband startup.
LightSquared triggered the first phase of the agreement last August to increase the amount of bandwidth available for the land-based part of its hybrid satellite-terrestrial LTE network. The second phase of the deal will give LightSquared additional capacity in exchange for an annual payment of $115 million to Inmarsat, which will increase 3 percent every year. LightSquared is also making a series of payments to Inmarsat totaling $337.5 million for the first phase of the project.
"We are pleased to report that LightSquared is experiencing very strong demand for capacity on its 4G-LTE wholesale network, and therefore we have decided to accelerate the triggering of Phase 2 of our agreement with Inmarsat," said LightSquared CEO Sanjiv Ahuja.
LightSquared will have up to 59 MHz of terrestrial and L-band ATC spectrum in the United States and Canada once the second phase of the project is complete. The company said in August that phase two of its Inmarsat deal would take about 30 months to complete.
The second phase of the project wasn't slated to go into effect until 2013. LightSquared accelerated the deal after clearing some financial and regulatory hurdles. The FCC agreed this week to let LightSquared use traditional land-based cell phones on its satellite spectrum. In October of last year, the company said it had landed its first customers and $850 million in financing.