Sprint on Thursday announced that it has inked a deal with LightSquared will see 4G LTE services built out on its massive nationwide network. LightSquared will pay Sprint $9 billion over 15 years for the right to build out its LTE network using Sprint infrastructure, and Sprint will also get a total of $4.5 billion in credits toward LTE and satellite service. Equally important to the nation's No. 3 carrier, the deal will allow it to save about $13 billion in network build-out costs and cover 260 million Americans with its 4G LTE service by 2015. “This spectrum hosting agreement with LightSquared allows Sprint to more efficiently use its Network Vision platform,” said Steve Elfman, Sprint's president of Network Operations and Wholesale, in a statement. “In addition to improving our cash flow, it provides additional options and flexibility in how we meet our customers’ future capacity needs.” The new deal is hardly unexpected, but it looks like those Network Vision boxes will come in handy sooner than some might have expected. Sprint's full press release follows below.
Sprint Nextel and LightSquared Announce Spectrum Hosting and Network Services Agreement
- LightSquared enters into a Spectrum Hosting and Network Services Agreement with Sprint that is expected to result in substantial savings for LightSquared and accelerate completion of LightSquared’s nationwide 4G-LTE network
- Sprint has option to purchase 4G capacity from LightSquared
- LightSquared enters into a nationwide 3G Roaming Agreement with Sprint
RESTON, Va. & OVERLAND PARK, Kan. (BUSINESS WIRE), July 28, 2011 – LightSquared™, the nation’s first wholesale-only integrated 4G-LTE wireless broadband and satellite network, and Sprint Nextel (NYSE: S) announced today they have entered into a 15-year agreement that includes spectrum hosting and network services, 4G wholesale, and 3G roaming.
This spectrum hosting arrangement leverages Sprint’s investment in its innovative, multi-year Network Vision plan. Under the agreement, LightSquared will pay Sprint to deploy and operate a nationwide LTE network that hosts L-Band spectrum licensed to or available to LightSquared. As a wholesale-only carrier with separate core network operations, LightSquared can sell its 4G broadband capacity produced through this spectrum hosting relationship to Sprint, other wireless carriers, and retail partners.
Under the terms of the agreement, during an 11 year period, LightSquared will make payments to Sprint of approximately $9 billion in cash for spectrum hosting and network services as well as LTE and satellite purchase credits which are currently estimated to be valued at approximately $4.5 billion. The agreement also provides Sprint the opportunity to purchase up to 50 percent of LightSquared’s expected L-Band 4G capacity. The wholesale purchase credits will provide Sprint the option to obtain cost-competitive access to 4G capacity by offsetting Sprint’s purchases of 4G capacity from LightSquared, should Sprint elect to incorporate the L-Band LTE capability as part of its 4G offering.
This agreement is expected to lower network capital and operating expenses for LightSquared by more than $13 billion over the next eight years in comparison with the cost of a stand-alone network build. LightSquared expects the deployment of the nationwide 4G-LTE network to be completed more than one year ahead of the Federal Communications Commission (FCC) mandate to cover 260 million Americans by 2015.
LightSquared has also entered into a 3G nationwide roaming agreement with Sprint. With access to Sprint’s 3G nationwide network, LightSquared’s wholesale customers will be able to offer combined 4G/3G data services as soon as LightSquared launches its first 4G markets in 2012.
“This spectrum hosting agreement with LightSquared allows Sprint to more efficiently use its Network Vision platform,” said Steve Elfman, president of Network Operations and Wholesale for Sprint. “In addition to improving our cash flow, it provides additional options and flexibility in how we meet our customers’ future capacity needs.”
“This agreement gives LightSquared a rapid and cost-effective radio access network build,” said LightSquared Chairman and CEO Sanjiv Ahuja. “With our next generation satellite already operational and our independent core network build underway, LightSquared is now well positioned to meet the fast-growing market demand for wireless broadband services with its wholesale-only integrated 4G-LTE and satellite network.”
The agreement is subject to LightSquared's obtaining resolution and FCC approval of certain interference issues involving terrestrial use of the L-Band spectrum.
“We believe LightSquared, in cooperation with the FCC and adjacent spectrum users, is taking proactive steps to address and resolve these issues in a timely manner,” said Elfman.