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Summary:

LightSquared, the company betting it all on a wholesale 4G wireless broadband network, said Tuesday it has raised $265 million from existing and new investors. None of the investors were named, but it brings LightSquared’s total funding to $2.3 billion just in the last year.

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LightSquared, the company betting it all on a wholesale 4G wireless broadband network, said Tuesday it has raised $265 million from existing and new investors. None of the investors were named, but it brings LightSquared’s total funding and debt to $2.3 billion just in the last year. Hey, it takes a lot of cash to build out a new broadband network using a hybrid satellite and terrestrial structure.

What’s even more impressive is that even $2.3 billion later, the network is not only not built — it’s late — but thanks to unexpected issues with interference, it may never be able to compete as an operational business, or even operate at all. Last week, an FCC report showed LightSquared’s network will interfere with the spectrum used by the GPS industry, throwing the future of the network into doubt. LightSquared has offered to phase in its network over time to avoid throwing GPS signals into a tailspin, but the GPS industry (which is actually somewhat at fault here because its radios weren’t built to handle interference) wants to shut LightSquared down. The FCC has to figure out what to do.

Unfortunately, it’s not just a matter of cash. LightSquared has so far overcome several issues on its transition from being a speculative spectrum play for financier Phil Falcone of Harbinger Capital Partners, which has backed LightSquared for years. Some of these obstacles include getting the original permission to use its satellite spectrum in conjunction with an earthbound network, problems launching a satellite, capital woes and the realization that LightSquared wasn’t going to be able to sell this spectrum, but would instead have to build out an entire network. Falcone’s bet on the MSS spectrum band had to turn from a spectrum play into an operational business. No wonder Harbinger’s investors were running scared.

LightSquared says it will use these funds for general corporate purposes, which includes constructing its LTE wholesale network. But what would be even better than the cash is learning that one of the investors ponying up would make a good ally for LightSquared in both its terrestrial build out and its fight against GPS. LightSquared is rumored to be in bed with Sprint for a deal, and if Sprint somehow managed to find some investment dollars to throw at this round, it might be a strong signal for the FCC and to us that LightSquared has more of a chance.

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  1. Robert Cathey Tuesday, July 5, 2011

    Stacey… Any idea where this latest round places LightSquared’s valuation?

    1. Stacey Higginbotham Robert Cathey Tuesday, July 5, 2011

      robert, not at this moment, but I am asking my sources for more info. I’ll update when I know more.

  2. ConnectedTraveler Tuesday, July 5, 2011

    What’s amazing is that LightSquared and their cadre of paid publicists, bloggers and consultants make the case that the GPS industry including the US Government hasn’t made it a top priority to re engineer their systems in order to accommodate LightSquared’s network.

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