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Sprint and LightSquared See Cost/Time Savings in New Network Deal, but Questions Remain | Jul 28, 2011 | Consumer Services U.S. | Analyst: Wes Henderek Event Summary July 28, 2011 - Sprint and LightSquared have announced a 15 year agreement where Sprint will provide LightSquared with network hosting and managed services for its coming LTE network and provide it with access to national 3G roaming on the Sprint CDMA network. LightSquared will pay Sprint $9 billion over an 11 year period in addition to $4.5 billion in LTE/satellite service credits and access of up 50 percent of its wholesale LTE network. | Read Press Release | Quick Take Analytical Summary • Current Perspective: Positive on Sprint and LightSquared’s broad-based network agreement, as both companies will likely realize a combination of benefits, although Sprint more so than LightSquared. Sprint will be paid $9 billion in cash, receive $4.5 billion in LTE network credits and be able to reserve up to 50 percent of LightSquared’s coming LTE network capacity. This gives the carrier another potentially viable path to LTE. LightSquared will benefit through the cost savings it will realize by outsourcing its network services. This should help LightSquared deliver early on its FCC service requirements for LTE/satellite buildout. Despite the positives, there are still some big risks related to the possible L band spectrum GPS interference issue. LightSquared will likely need to raise more cash, which could bring their long term viability as a partner into question if there are any delays. LightSquared is also quickly running out of potential big customers, with T-Mobile about to be bought by AT&T. • Vendor Importance: Very high to LightSquared and high to Sprint, as this agreement has the potential to help both companies. LightSquared not only needed to add a large partner, but it badly needed to find a way to reduce the cost of its LTE network buildout along with delivering it on schedule. This need likely outweighed the fact that LightSquared is paying Sprint and not being paid. Sprint also needs to figure out a long term path to LTE in an economical way as part of its Network Vision plan. Although it has still not indicated that it is moving to LTE, the deal with LightSquared gives the carrier another viable option to move forward, while at the same time helping to reduce network buildout costs through network hosting economies of scale and not having to purchase lots of spectrum. • Market Impact: Low on the wireless service segment, because although the Sprint/LightSquared deal will likely benefit both companies, there will still be a big time lag and lots of uncertainty before LightSquared could offer national LTE coverage. In fact, even under the most aggressive targets, the network will not have national coverage until almost 2015. In the meantime, Verizon Wireless has already launched LTE and is building its network out aggressively, along with some LTE sharing agreements of its own. In addition, AT&T is also set to launch LTE and will have even better scale if the T-Mobile USA merger is approved. As a result, LightSquared and Sprint (if it chooses to go with LTE) would likely still be behind other leading carriers, even if the deal goes smoothly. CLIENTS ONLY Current Perspective Competitive Strengths and Weaknesses Response & Recommendations Buyer Actions Analytical Perspective | Client access - Full report in Consumer Services U.S. | More information Top Top

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Sprint Nextel and LightSquared Announce Spectrum Hosting and Network Services Agreement

NEWS HIGHLIGHTS:
• 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 - LightSquaredTM, 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.

About LightSquared

LightSquared's mission is to revolutionize the U.S. wireless industry. With the creation of the first-ever, wholesale-only nationwide 4G-LTE network integrated with satellite coverage, LightSquared offers people the speed, value and reliability of universal connectivity, wherever they are in the United States. As a wholesale-only operator, LightSquared will deploy an open 4G wireless broadband network to be used by existing and new service providers to sell their own devices, applications and services - at a competitive cost and without retail competition from LightSquared. The deployment and operation of LightSquared's network represent more than $14 billion of private investment over the next eight years. For more information about LightSquared, please go to www.LightSquared.com, www.facebook.com/LightSquared and www.twitter.com/LightSquared.

About Sprint Nextel

Sprint Nextel offers a comprehensive range of wireless and wireline communications services bringing the freedom of mobility to consumers, businesses and government users. Sprint Nextel served more than 51 million customers at the end of 1Q 2011 and is widely recognized for developing, engineering and deploying innovative technologies, including the first wireless 4G service from a national carrier in the United States; offering industry-leading mobile data services, leading prepaid brands including Virgin Mobile USA, Boost Mobile, and Assurance Wireless; instant national and international push-to-talk capabilities; and a global Tier 1 Internet backbone. Newsweek ranked Sprint No. 6 in its 2010 Green Rankings, listing it as one of the nation's greenest companies, the highest of any telecommunications company. You can learn more and visit Sprint at www.sprint.com or www.facebook.com/sprint and www.twitter.com/sprint.