Sprint will terminate its 15-year, $9 billion partnership agreement with LightSquared, the company recently announced. America’s third largest wireless carrier will return $65 million in payments to the startup.
The partnership would have enabled LightSquared to use the phone carrier’s 40,000 towers to build out a ground based network covering 260 million Americans with high speed 4G LTE by 2016. The agreement depended on LightSquared receiving FCC regulatory approval of its network, which was blocked earlier this year by regulators over concerns that it would hamper GPS functioning.
The partnership would have saved LightSquared $13 billion in costs through the end of the decade.
Sprint offered to heal the partnership if LightSquared could get regulatory approval.
“We remain open to considering future spectrum hosting agreements with LightSquared, should they resolve these interference issues, as well as other interested spectrum holders,” Sprint said in a statement.
Though it’s a bitter blow to the startup network, LightSquared could certainly use the returned check. Previously, LightSquared had announced it would cut half its staff of 330 to balance its books, and that it has just enough cash to continue operating for a few quarters. The money will help pay for a nice legal defense as the company appeals its case to the FCC.
The company recently hired top conservative litigators Theodore Olson and Eugene Scalia, Politico reported. Olson has argued before the bench on both sides of the political spectrum, successfully representing former President George W. Bush in the landmark Bush v. Gore and Citizens United, as well as a challenge to California’s gay marriage ban as unconstitutional.
“These regulatory delays are unfortunate because they will deprive the American people of the benefits of additional competition in the wireless industry,” said Doug Smith, LightSquared’s chief network officer and interim co-chief operating officer, in a statement on Friday.
The stakes are huge, and not just for LightSpeed. The company has received investment in Falcone’s Harbringer Capital Partners, whose controlled assets are down to $4 billion after once being $26 billion. The hedge fund has a little more than half its money tied up in the startup, and is the single largest investor in the company, according to the Chicago Tribune.
Sprint said the broken agreement will have no effect on its customer’s coverage.