Is LightSquared's Spectrum Worth $3.3B?

It's alive!

Private-equity firm Centerbridge Partners LP is reportedly mulling a $3.3 billion bid for LightSquared , which would top a $2.2 billion offer Dish Network LLC (Nasdaq: DISH) made for the would-be 4G provider earlier this year. (See Ergen's Latest Gambit: $2B for LightSquared?)

The Wall Street Journal quoted sources saying that Centerbridge is proposing to pay more than $3.3 billion for the Philip Falcone-backed venture and take on $1.7 billion in liabilities. The talks are still said to be "fluid" and a deal isn't entirely certain yet.

LightSquared, you may remember, didn't fancy the $2.2 billion Dish bid much. Falcone turned 'round and sued Dish CEO Charlie Ergen for $4 billion, claiming that he had been secretly trying to gain control of LightSquared through an investment management firm. (See LightSquared Boss Sues Dish for $4B.)

Centerbridge appears to be gambling that LightSquared's spectrum has value or, at least, will have value in the future. LightSquared holds satellite spectrum in the L-Band (1525-1559 MHz) that it wanted to use to build a network that combined LTE coverage from the ground plus satellite coverage from space. (See LightSquared: Too Important to Fail?)

The FCC eventually found that the company's LTE basestation's broadcasts interfered with the weak signals from GPS transceivers and blocked it from using the spectrum in 2012. (See We're Jamming: GPS Weakness Could Sink Wireless and FCC Moves to Block LightSquared.)

LightSquared has presented spectrum compromises and alternatives since then, but the Federal Communications Commission (FCC) hasn't approved any of them yet. (See LightSquared: The Company That Won't Die.)

Which makes me wonder if Centerbridge knows something we don't. The PE firm appears to be considering spending billions on spectrum that can't be used for next-gen wireless services, as things stand.

It's possible that could change in the future, but there's no obvious indication of that yet. A $3.3 billion buyout could be a big bet for Centerbridge.

— Dan Jones, Mobile Editor, Light Reading

COMMENTS Add Comment
DanJones 12/17/2013 | 12:49:00 PM
Re: Surely not a long-term play... Okay then.
Sarah Thomas 12/17/2013 | 12:46:48 PM
Re: Surely not a long-term play... Well, apparently the answer is "no." That was fast -- Centerbridge backed out today "for both economic and non-economic reasons."

DanJones 12/17/2013 | 10:33:27 AM
Re: Surely not a long-term play... Perhaps there's another LightSquared plan in the works about how to use the spectrum though? I can't see what they could do to please the FCC at this point but hope springs eternal no?
DanJones 12/17/2013 | 10:30:25 AM
Re: Surely not a long-term play... Well, you could use the MSS L-Band spectrum for -- wait for it! -- satellite service!!! LightSquared/SkyTerra does have a satellite up after all.
[email protected] 12/17/2013 | 4:14:51 AM
Surely not a long-term play... Hard to imagine this would be a long-term play for a PE firm, so what might the short-term gain be? Has centerbridge figured something that falcone and his team didn't?

What a mess, though...
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