Specifically, 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.
Highlights of the Sprint/LightSquared Spectrum hosting agreement:
- During an 11-year period, LightSquared will pay $9 billion in cash to Sprint
- $4.5 billion in LTE and satellite purchase credits to Sprint, if Sprint chooses to resell capacity
- Sprint can purchase up to 50 percent of LightSquared’s expected L-Band 4G capacity
- LightSquared gets a 3G nationwide roaming agreement with Sprint
- The deal is subject to LightSquared’s obtaining resolution and FCC approval of certain interference issues involving terrestrial use of the L-Band spectrum.
- Sprint expects positive adjusted OIBDA and margin impact over 11 year period
- Sprint expects a free cash flow benefit
- Sprint will outline its full 4G network strategy on October 7th.
“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.” http://www.sprint.com http://www.lightsquared.com
- Earlier this week, Sprint and Crown Castle announced a new agreement to enable the delivery of the next-generation networks through Sprint’s Network Vision plan. The agreement impacts more than 10,000 of Sprint’s nationwide cell sites.
- In December 2010, Sprint unveiled its “Network Vision”
The key idea behind Sprint’s “Network Vision” is to operate a single network. Sprint currently uses separate equipment to deploy services on 800 MHz spectrum, 1.9 GHz spectrum and, through its relationship with Clearwire, 2.5 GHz spectrum. The New Vision blueprint calls for the deployment of multimode base stations for delivering 3G/4G services across all of these bands. New remote radio heads at the cell sites would be connected with fiber rather than coaxial risers. The consolidated cell site would be significantly more energy-efficient.
Sprint intends to repurpose some of its 800MHz spectrum for CDMA service, thereby enhancing coverage, particularly the in-building experience for customers. Augmenting its 1.9GHz footprint with 800MHz, Sprint expects its CDMA coverage density will increase throughout the country.
Regarding its iDEN network and push-to-talk, Sprint expects to launch the next-generation of PTT services in 2011 on the CDMA network, offering customers sub-second call set-up time along with robust data capabilities. There are no immediate plans to force migrate iDEN customers to the CDMA network, but Sprint expects its PTT device/app portfolio on the CDMA network will continue to evolve to include high-bandwidth data services.
“Network Vision builds on our legacy of wireless innovation and represents the next step in the evolution of our networks to best meet unprecedented growth in mobility services. We are well- positioned to take advantage of new technology, chipsets, devices and applications. Working with these three partners, we expect to deliver to our customers the most cutting-edge network capabilities available today and in the future.”
The financial impact of the Network Vision plan includes a total, estimated incremental cost over the deployment period to be between $4 billion and $5 billion. Sprint estimates the total net financial benefit over a seven-year period will be between $10 billion and $11 billion.
The vendor contracts with Alcatel-Lucent, Ericsson and Samsung includes purchases of hardware, software and services. These contracts are divided geographically:
Alcatel-Lucent: New York City, Philadelphia, Boston, Washington, D.C./Baltimore and Los Angeles
Ericsson: Atlanta, Miami, Houston, Kansas City and Dallas
Samsung: Chicago, Denver, Pittsburgh, San Francisco and Seattle.
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