updated 04:10 pm EDT, Fri June 3, 2011
Deal bigger and longer than expected
Recently, LightSquared and Sprint have been rumored to be closing in a long term arrangement for LightSquared to rent out part of Sprint's wireless network backbone for its own 4G service. The deal now appears to be both bigger and longer term than originally anticipated based on leaks late Thursday. Over the next 15 years, LightSquared could pay up to a total of $20 billion, Bloomberg heard.
Previously, the deal was thought to be for $16 billion spread out over eight years.
Initially, LightSquared would pay Sprint up to $2 billion a year to help finance infrastructure construction costs. In later years, the amount Sprint would receive would be based upon the number of customers using the network.
Sprint could also save several hundred million dollars in operating costs by using LightSquared's excess network bandwidth. The company has finally begun adding customers in earnest but can still lose hundreds of millions of dollars each quarter as network costs and other expenses have dragged it down.