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Window opens for Sprint Nextel to cancel its network agreement with LightSquared

A window is opening to allow Overland Park-based Sprint Nextel Corp. to cancel its $9 billion 15-year deal with prospective wireless network operator LightSquared Inc.

Sprint had told shareholders that today was the earliest it could cancel the deal and the Wall Street Journal reported online that Sprint will do so Friday. The Journal cited people familiar with the plans without identifying them.

A Sprint spokeswoman said the company would not comment on its plans.

The Journal said a LightSquared spokesman declined to comment on Sprint’s plans. But the Journal report said LightSquared would “file a defense of its network” at the Federal Communications Commission on Friday, according to the spokesman.

LightSquared, which is based in Reston, Va., has struggled to resolve technical objections that regulators raised about its plan to use satellite signals along with cellular towers on the ground to deliver a faster wireless network.

LightSquared also has recently lost its CEO, cut jobs and missed a payment to another partner.

It had signed a contract with Sprint last June to deploy and operate the network, promising $9 billion as well as credits Sprint could cash in to use the network.

Sprint announced the deal with the proviso that LightSquared gain financing and resolve its issues that involve claims of interference with GPS signals. The two companies have extended the deal in the past.

In its annual report filed with the Securities and Exchange Commission Feb. 27, Sprint had said it could cancel the deal as early as today or as late as April 30. It said LightSquared would be able to defer Sprint’s ability to cancel until June if LightSquared’s lenders agreed to extend deal.

The Journal report said that LightSquared’s opportunity to get their agreement would run out today but that it was unclear whether the lenders had made their decision.

If the deal is canceled, Sprint has said it would have to repay $74 million of the $310 million it already has received from LightSquared under the deal.

Sprint has counted on LightSquared’s planned network to extend its own ability to provide customers with faster cell service using Long Term Evolution, or LTE, technology.

Sprint already is adding LTE during its own network upgrade. It plans to gain additional LTE capacity from Clearwire Corp., which is adding to its existing WiMax network that Sprint already uses for its current 4G speed service.

| Mark Davis, mdavis@kcstar.com

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