Electronic Products & Technology

LightSquared delivered notice to commence Phase 1 of Cooperation Agreement with Inmarsat


Electronics CEL

LightSquared announced it has "delivered notice to Inmarsat triggering Phase 1 of a Cooperation Agreement" between the two companies.

Under this cooperation agreement, which was first signed in December 2007, Inmarsat and SkyTerra (now LightSquared) had designed a plan “aimed at addressing growing wireless broadband demand.” It was to increase the amount of contiguous spectrum available for both parties and to enhance operational flexibility for deployment of its 4G-LTE integrated terrestrial and satellite network.

To begin Phase 1, Inmarsat will “immediately begin a process of transition to a modified spectrum plan to increase spectrum contiguity.” This process should take 18 months and requires Inmarsat to “incur the cost of certain network modifications.” During this phase, LightSquared will make a series of payments to Inmarsat:

– Upon exercise, LightSquared made an initial payment of $81.25 million (USD) ($31.25 million (USD) plus first instalment of $50 million (USD)).
– Following the initial payment of $81.25 million (USD), LightSquared will pay $40 million (USD) every three months until the final $40 million (USD) instalment is paid 15 months from the trigger date.
– At the Phase 1 completion date (targeted for 18 months following the trigger date), LightSquared will pay another $56.25 million (USD).

Phase 2 is optional for LightSquared if they choose to add further capacity to its network. This phase may be exercised at any time through January 1, 2013 and “provides that Inmarsat would make additional spectrum available at an annual cost of $115 million (USD) per year. It is expected to take up to 30 months.




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