The country’s third largest wireless carrier, Sprint Nextel, has terminated its 15-year agreement with wholesale wireless startup LightSquared.
Back in July, LightSquared signed a $9 billion 15-year agreement with Sprint to build and host its LTE network, which is crucial for the company to reach the targeted launch date of its wireless network. Now, however, Sprint is ending that agreement and returning $65 million in prepayments, the company announced today.
Sprint isn’t the first company to back down from prior contracts with LightSquared.
Last month, the Federal Communications Commission (FCC) rejected LightSquared’s plans to launch its LTE network due to concerns that it would interfere with both commercial and military GPS technology. Because of that, major LightSquared client Leap Wireless decided to buy future LTE connectivity for its Cricket prepaid service from Clearwire, another troubled wireless company (of which Sprint is the largest non-controlling stakeholder). And earlier this year, LightSquared client FreedomPop also decided to go with Clearwire as well.
Without Sprint helping to build LightSquared’s network, the startup may have trouble gaining additional clients. The company has hired a high-profile legal team to fight the FCC’s decision to reject its LTE network from launching. If successful, it could buy LightSquared some time.