(Updates with Sprint comment in third paragraph.)
Jan. 5 (Bloomberg) -- Sprint Nextel Corp. put its investment in a partnership with LightSquared Inc. on hold as the wireless venture seeks an operating license from U.S. regulators, Sprint Chief Executive Officer Dan Hesse said.
The CEO told a Citigroup Inc. conference in San Francisco today that he hopes LightSquared, backed by billionaire Philip Falcone’s hedge fund, can resolve technology hurdles needed to gain regulatory approval.
“The companies have agreed to realigning our deployment timeline to coincide with potential FCC actions,” Scott Sloat, a spokesman for Overland Park, Kansas-based Sprint, said in an e-mail. Until approval is received, “both companies believe it is prudent to pull back on expenses,” he said.
LightSquared faces U.S. government scrutiny on whether its service interferes with global-positioning system gear used by automobiles, boats, aircraft and farm equipment. U.S. officials on Dec. 14 said LightSquared signals disrupt a flight-safety system that uses GPS to warn pilots of approaching terrain.
Last week, Sprint granted LightSquared a one-month extension, until Jan. 31, to obtain the regulatory approval. LightSquared gaining the federal license is a condition of their July agreement, under which Sprint would build and operate LightSquared’s so-called fourth-generation network during an 11-year period in exchange for $9 billion in payments and an additional $4.5 billion in service credits.
Sprint has agreed to network construction for LightSquared in exchange for advanced payments. Through the third quarter, Sprint received about $290 million from LightSquared, Sloat said today.
Sprint fell 3 percent to $2.24 at the close in New York. The shares tumbled 45 percent last year.
A representative for Reston, Virginia-based LightSquared wasn’t immediately available to comment.
LightSquared has said GPS manufacturers should have planned to accommodate the company’s use of the airwaves. GPS makers have said LightSquared inappropriately plans to send powerful smartphone signals on airwaves previously reserved mainly for satellite traffic.
--Editors: John Lear, Niamh Ring
To contact the reporters on this story: Scott Moritz in New York at email@example.com; Todd Shields in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Ville Heiskanen at email@example.com