LightSquared: Going from bad to worse
Things are not looking good for LightSquared, the wireless startup that had planned to build a nationwide wireless broadband network.
Today, Reuters reported that the company said it plans to cut 45 percent of its workforce to conserve cash.
"This and other cost savings measures will allow LightSquared to continue to navigate the regulatory process as it works with the appropriate government agencies to find solutions to the GPS interference issue and bring its $14 billion privately funded wireless broadband network to more than 260 million Americans," according to the statement.
And yesterday, several news outlets reported that LightSquared missed a payment to its satellite partner Inmarsat for spectrum it plans to use to build its network. Inmarsat said Monday that it hadn't received a $56.3 million payment from LightSquared. The two companies have been in discussions, but Inmarsat said it couldn't provide "any assurance" it will get further payments.
LightSquared said in a statement that it plans to fulfill its obligations to Inmarsat, but it also said that Inmarsat has not completed its obligations for further payment.
"LightSquared is committed to fulfilling its business plan to bring world-class wireless broadband connectivity to millions of Americans and believes that Inmarsat will remain an important partner in the company's future endeavors," the company said in a statement made available to The Wall Street Journal.
LightSquared employs 330 people and is headquartered in Reston, Va. It's backed by Harbinger Capital Partners, the hedge fund run by Philip Falcone. The hedge fund staked its entire fund on LightSquared. On Friday a group of investors sued Falcone and Harbinger in Manhattan federal court. The investors said that LightSquared had squandered billions of dollars with its "all-in" investment, according to the Journal.
LightSquared has been fighting an uphill political battle for the past year to use 40MHz of wireless spectrum it owns or has leased to build a nationwide wireless broadband network that will compete with AT&T and Verizon Wireless. The company received a conditional waiver to use its spectrum to provide terrestrial-only services last January.
But last week the FCC pulled its conditional waiver stating that there were still interference concerns with GPS signals. The GPS industry has lobbied hard against LightSquared for a year complaining that some GPS receivers may experience interference from signals on LightSquared's network.
LightSquared has vowed to fight on and to win approval for the waiver from the FCC. A source close to the matter told Reuters that the company is not considering bankruptcy.
That said, LightSquared's prospects seem to be worsening by the day. The company was not available to provide further comment on its situation.