Falcone's Venture Runs Into Static

Philip Falcone's plan to build a multibillion-dollar telecom network, the defining bet of his metamorphosis from hedge-fund manager to technology start-up investor, is getting dogged by interference. The challenges to his plan, which has involved dedicating much of his hedge funds' money to a single technology venture, range from technical and regulatory issues to twists in deal talks with a potential wireless partner.

Meanwhile, angst has risen among hedge-fund investors who feel tied to the future of a company they never bought into, investors said. Some investors who have wanted to withdraw money from Mr. Falcone's firm, Harbinger Capital Partners, have had to wait for much of that money. This month, Harbinger told clients who are withdrawing money that they would be paid in part with stakes in the wireless start-up. The developments are the latest signs that Falcone, who since 2007 has garnered attention for making, as well as losing, billions of dollars as a hedge-fund manager, still has an uphill climb to succeed in his most ambitious bet yet.