The much rumored and much talked about deal between Overland Park, Kan.-based Sprint Nextel (s S) and upstart 4G network company, LightSquared has finally come to fruition, the two companies announced Thursday. LightSquared is a wireless network based in Reston, Va., using re-purposed satellite-related spectrum to build a 4G wireless broadband network.
This is a 15-year agreement that includes spectrum hosting and network services, 4G wholesale, and 3G roaming, the two companies said. LightSquared believes this deal will lower its network capital and operating expenses by more than $13 billion over the next eight years and 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.
Here are the facts of the deal:
- LightSquared will make payments to Sprint of approximately $9 billion over 11 years.
- LightSquared will purchase credits valued at $4.5 billion.
- The wholesale purchase credits will provide Sprint the option to obtain cost-competitive access to 4G capacity.
- Sprint can purchase up to 50 percent of LightSquared capacity.
- Sprint will deploy and operate a national LTE network. It isn’t clear how Sprint will finance this LTE network.
- LightSquared will buy 3G from Sprint.
- LightSquared is still stuck in neutral over GPS interference issues and cannot move forward without resolving those.
- FCC still has to rule on all this and give its blessings.
At first blush, this is a great deal for Sprint as they get a tenant for their 4G networks.