Satellite operator Inmarsat filed a new lawsuit against Ligado Networks warning that the company will owe it around $396 million starting next month, and that Ligado is unlikely to be able to pay that amount.

One analyst warned that Ligado could be running out of options.

"Bankruptcy looks to be the next step," tweeted analyst Tim Farrar with TMF Associates.

Figure 1: (Source: Arisa Chattasa on Unsplash)

The development comes just months after Ligado canceled plans to launch a 5G network in its 1526MHz-1536MHz spectrum in parts of Virginia. And that decision came just days after a US government report raised questions about whether Ligado's planned network would interfere with GPS and other existing devices and networks.

The collapse of a 'Cooperation Agreement'

As noted by Wall Street Journal reporter Drew FitzGerald, Inmarsat last week filed a lawsuit against Ligado "because Ligado has made clear that it will not pay substantial sums of money owing to Inmarsat under a 'Cooperation Agreement' between the two companies involving the coordination of satellite spectrum rights."

Under that agreement, first inked in 2007, Inmarsat agreed to provide some of its L-Band spectrum to a company that launched in 2010 called LightSquared. LightSquared planned to build a 4G LTE network that it would resell to other telecom operators or other companies. However, that plan fell apart after the FCC ruled that the proposed network would interfere with GPS signals.

LightSquared fell into bankruptcy, but Ligado arose from LightSquared's ashes in 2015 with a plan to build a 5G network using that same L-Band spectrum, but this time focusing on the Internet of Things (IoT). In 2016, Inmarsat updated its Cooperation Agreement with Ligado, and in October 2020 Ligado raised $3.85 billion in fresh capital, with $700 million earmarked for Inmarsat.

"Since October 2020, however, Ligado has failed to get its business off the ground, and has stated unequivocally that it cannot and will not pay Inmarsat the amounts due on January 1, 2023," Inmarsat wrote in its new lawsuit. "The Cooperation Agreement provides that for any payment default, the parties are to revert to a particular 'Default Spectrum Plan' that allocates the L-band spectrum in a manner that is more favorable to Inmarsat. But Ligado has stated that it intends to nonetheless 'hold on' to the spectrum, even though it cannot pay Inmarsat the amounts deferred since 2016 that are due on January 1, 2023. In sum, Ligado is apparently intent on holding on to the spectrum usage rights, without meeting the obligation to pay for it."

Ligado's next steps

According to Ligado, Inmarsat has failed to hold up its own side of the companies' agreement by failing to provide "spectrum free from interference."

At issue are the terminals operated by Inmarsat's customers, and whether they've been updated to avoid interfering with other types of wireless operations.

But Inmarsat, for its part, argues that the companies' "Cooperation Agreement" allows it to handle that issue "as it sees fit."

Regardless, Ligado argued that it's the victim here. "Inmarsat's baseless move yesterday [to file a lawsuit] clearly indicates they are not committed to resolve this dispute amicably. Inmarsat's lawsuit lacks merit and distracts from its own failure. Ligado is the injured party in this dispute and intends to enforce its rights," the company wrote in a statement to Light Reading late last week.

It's unclear what might happen next. But it appears Ligado is facing many of the same circumstances that its corporate predecessor, LightSquared, faced prior to its own bankruptcy filing in 2012.

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— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano