Sprint Nextel Corporation (NYSE:S) announced today that it would end a deal with the satellite and cellular data company Lightsquared Inc.. Philip Falcone is the founder of the company. The parent of the corporation is Harbringer Capital Partners, Falcone’s hedge fund. Sprint said it would return $65 million in prepayments made to the company. The deal was to have seen Lightsquared’s network compliment Sprint’s own service enabling them to deliver 4G-LTE coverage. The FCC made a ruling last month stifling Lightsquared’s ability to provide its network. That ruling led directly to the termination of what was to have been a 15 year deal worth $9 billion in total.
The ruling by the FCC centered around complaints that Lightsquared’s network interfered with GPS signals and could lead to a degradation in their service. The spectrum the firm had secured rights to and planned to operate on lies next to the radio frequencies employed by satellite navigation networks. Garmin Ltd. (NASDAQ:GRMN) a worldwide manufacturer of GPS systems was one of the firms that brought the interference issues to light with the FCC. The company is still battling to have that injunction removed. According to reports the company will bring a “defense of its network” to the FCC today. The company hopes to be allowed to use the segment of spectrum for its network.
Since its inception in January 2012, the long book of the Voss Value Fund, Voss Capital's flagship offering, has substantially outperformed the market. The long/short equity fund has turned every $1 invested into an estimated $13.37. Over the same time frame, every $1 invested in the S&P 500 has become $3.66. Q1 2021 hedge fund Read More
Sprint is the United States third biggest carrier but currently doe not offer 4G coverage. The ruling was a setback for the Telecom giant as its LTE network introduction will now be delayed. The company says it plans to offer the service after its next upgrade. 4G service is becoming increasing in demand particularly in cities. The release of the iPad today complete with LTE ability should increase demand for such service. The next iPhone when it is released is expected to employ similar technology on the back of the iPad’s advance.
Philip Falcone, whose fund owns the troubled Lightsquared Inc., has had more than one problem of late. He has had a public war of words with Senator Charles E. Grassley in February over his Lightsquared venture. The Senator had accused him of inappropriate lobbying. There has also been trouble closer to home. Harbringer Capital Partners LLC saw a 47% loss in value in 2011 according to SEC filings. That loss in a terrible year for hedge funds combined with Lightsquared’s current difficulties have compounded Falcone’s problems. News abounds that Lightsquared may run out of money before Senator Grassley manages to complete his investigation.