LightSquared has delivered notice to Inmarsat triggering Phase 1 of a Cooperation Agreement between Inmarsat and LightSquared. Under the Cooperation Agreement originally signed in December 2007, Inmarsat and SkyTerra (now LightSquared), designed a phased plan aimed at addressing growing wireless broadband demand. The agreement increases the amount of contiguous spectrum available to both parties and provides LightSquared enhanced operational flexibility for deployment of its 4G-LTE integrated terrestrial and satellite network.
"Implementation of this agreement represents a significant milestone in LightSquared’s plan to build the nation’s first wholesale only 4G-LTE wireless broadband network," said Sanjiv Ahuja, chairman and CEO of LightSquared, in a statement. "Triggering this agreement will now give us the contiguous spectrum we need to support additional network capacity to meet the growing demand for wireless data."
To implement Phase 1, Inmarsat will immediately begin a process of transition to a modified spectrum plan to increase spectrum contiguity. This process is expected to take 18 months and will require Inmarsat to incur the cost of certain network modifications. During implementation of Phase 1, LightSquared will make a series of payments to Inmarsat, totaling $337.5 million.
Additionally, LightSquared has an option to implement Phase 2, which will add further capacity to its network. Phase 2 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 per year. The Phase 2 process is expected to take 30 months following the exercise by LightSquared of the Phase 2 option.