Sprint's Still Hoping to Move at the Speed of LightSquared

For investors drooling over the possibility that Sprint Nextel (NYSE: S  ) might become a serious national wireless competitor again, two things have to happen to bring their hopes to life. First, AT&T’s (NYSE: T  ) proposal to acquire T-Mobile has to die. That just may happen now that the Department of Justice has filed an antitrust lawsuit to halt that deal.

The second necessity is for LightSquared, the LTE network-provider, to finally satisfy the Federal Communications Commission that its wireless spectrum does not interfere with GPS receivers. Sprint had just signed a 15-year, $9 billion deal with LightSquared to provide it with 4G spectrum hosting, a service that Sprint must have to compete with AT&T and Verizon (NYSE: VZ  ) in the future.

The GPS industry fears that LightSquared's high-powered signals will drown out the relatively weak GPS signals and create havoc among GPS users, including the aviation industry. The FCC won't allow LightSquared to turn on its network until it is satisfied that there are no interference problems.

A solution?
An end to the LightSquared standoff may be at hand, according to LightSquared Executive Vice President Martin Harriman. Yesterday he said: "We have made some big concessions … I expect there to be a resolution in the next month." LightSquared's proposal includes only using a smaller portion of its spectrum and limiting the power of its ground base stations. LightSquared would also need to develop a filter to be used by the more sensitive precision GPS receivers.

The stakes are high
Sprint had been counting on using Clearwire (Nasdaq: CLWR  ) as its 4G broadband provider, but Its WiMAX service hasn't quite lived up to expectations. This not only reinforces Sprint's need to get the LightSquared bottleneck cleared up, but it also points to another problem that Sprint has to deal with: what to do with Clearwire, of which it owns a majority. Clearwire has announced that it will build its own LTE network, but it will need to raise $600 million to do so. So far, no takers.

Sprint looks to be in a more promising position than it was when I wrote about it last month. But even if all of the above does work out, Sprint will still have a way to go to get back to profitability.

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  • Report this Comment On September 14, 2011, at 11:42 PM, MattC69 wrote:

    "Sprint had just signed a 15-year, $9 billion deal with LightSquared to provide it with 4G spectrum hosting"

    - July was over 6 weeks ago. The ink's dry by now.

    "The FCC won't allow LightSquared to turn on its network until it is satisfied that there are no interference problems."

    - The crucial point is that Lightsquared doesn't have any network. It wants to piggyback on Sprint's, so the issue of "turn[ing] on its network" simply doesn't arise at this point. Presently, Lightsquared simply does not have a product to sell. Kinda an important point...

    "An end to the LightSquared standoff may be at hand, according to LightSquared Executive Vice President Martin Harriman. Yesterday he said..."

    - And notwithstanding, yesterday the FCC still said that Lightsquared's proposed network needs more testing to ensure that it won’t cause harmful interference to global-positioning system operations, noting that interference concerns persist even following the revision of plans by LightSquared, which is proposing to initially use only parts of its airwaves away from those used by GPS. So I think you got it wrong here.

    "Sprint had been counting on using Clearwire as its 4G broadband provider, but Its WiMAX service hasn't quite lived up to expectations."

    - You may want to review Clearwire's 2Q Earning Report and the comments of it's Execs in relation to subs growth, current and projected...

    "...Sprint has to deal with: what to do with Clearwire... Clearwire has announced that it will build its own LTE network, but it will need to raise $600 million to do so. So far, no takers."

    - Sure Sprint is in a bad place, but, as you point out, it is the majority shareholder in CLWR, and has NO 4G network without it. Lightsquared still has NO product to sell - thats the point! And Sprint has reportedly been in talks with Comcast (and who knows whoever else) to obtain funding to buy the rest of CLWR. The question is, does Sprint really have any other choice but to buyout CLWR? It has tried to play CLWR off the break with Lightsquared, but that play seems to be badly falling to pieces both S and Lightsquared. As it stands, theres no netweork for Lightsquared, and no money for S. And what would S do with the money it would derive from the deal with Lightsquared??? Buy out CLWR???

  • Report this Comment On September 15, 2011, at 2:08 AM, jhf678 wrote:

    wow this guy MattC69 must be a competitor to spend so much time and effort in his response.

    My opinion is that Sprint will do great the end of this year and next year once iPhone customer switch to Sprint from AT&T. Maybe AT&T should acquire Sprint instead of T-mobile.

  • Report this Comment On September 15, 2011, at 9:10 AM, broj999 wrote:

    If you had a clue of what clearwire is capable of and how easy it is for clearwire to provide more bandwidth than lightsquared and ATT have combined. The move to LTE for Clearwire is simple cheap and quick as they have already paid for the backhaul portion. Please do your research and listen to the technical subject experts instead of hype rumors.

  • Report this Comment On September 15, 2011, at 11:38 PM, MattC69 wrote:

    Actually jhf678, it took me less than 8 minutes. I research those stocks I own, and others I don't... You find that objectionable??? Thats weird! So it really doesn't take too long to throw a few facts into the mix. But thanks for the concern as to how I spend my time - a little off point though... Motley Fools indeed!

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