LightSquared Reaches 15-Year Sprint Deal That May Be Valued at $20 Billion

Billionaire Philip Falcone’s LightSquared reached a 15-year deal with Sprint Nextel to share network expansion costs and equipment, and to provide high-speed wireless service to the phone company.

“LightSquared and Sprint will jointly develop, deploy and operate LightSquared’s 4G LTE network,” according to a letter from Falcone to Harbinger Capital Partners hedge fund investors. “Sprint will become a significant customer of LightSquared’s 4G LTE network.” The deal is an important step forward for Falcone, whose effort to challenge Verizon Wireless and AT&T was met with skepticism after plans for LightSquared emerged in government filings about 15 months ago. Falcone is gambling more than 60 percent of his hedge fund on LightSquared. For Sprint, the deal would provide a new source of revenue as the third-largest U.S. wireless company struggles to compete with bigger rivals Verizon and AT&T. Sprint has pledged $5 billion to upgrade its network over the next three to five years. The company can use LightSquared’s network to lessen the load on its own network as data demand has skyrocketed, an issue that has plagued other carriers.