Bloomberg has filed a report citing sources within Sprint that states that the carrier will be walking away from its network sharing deal with LightSquared in light of the network’s struggles to remain viable in the wake of the FCC’s recent revocation of its provisional approval for LightSquared to launch its planned LTE network.
For Sprint to walk away from the deal represents a major blow for the struggling company which is expected to name former Sprint executive Tim Donahue to its CEO position after previous CEO Ranjiv Ahuja abruptly left the post following the FCC rejection late last month.
Sprint is also showing signs of stress as of late following a last-minute rejection by the board of directors to purchase MetroPCS spearheaded by CEO Dan Hessee, a deal that was all but done short of an official announcement, which was originally expected this week. With Sprint looking to shore up its own spectrum holdings in the wake of Clearwire’s struggles to remain solvent and operational, Hessee may have looked to MetroPCS to solve that problem for its forthcoming LTE network, despite Sprint being in no position financially to shoulder the purported $8 billion purchase price for MetroPCS, which would have included assumption of the regional carrier’s debt.
Now that Sprint is set to walk away from the deal and return the reported $74 million payment that sealed the previous agreement, it needs to figure out what to do in the short term, as Clearwire has yet to begin any significant work on its LTE network buildout while it continues to maintain its WiMax network during its own planned transition to LTE, which is expected in 2013. As a consequence of the failed LightSquared deal and Clearwire’s struggles, Sprint may have found a way to shore up its short- term problems by signing up more than ten companies to new wholesale LTE deals as those that also signed deals with LightSquared look for alternatives in order to offer LTE access.