Harbinger-Skyterra ink $7 billion deal with Nokia to build 4G LTE satellite mobile broadband network

Harbinger Capital, a New York investment firm with extensive telecommunications holdings, announced Tuesday a eight-year, $7 billion deal with Nokia Siemens Networks to build and operate a satellite and mobile broadband network for wireless providers and other businesses.

The new venture will feature the mobile high-speed Internet service developed by Nokia Siemens and rely on satellites and terrestrial spectrum that Harbinger acquired through its purchase of Reston-based SkyTerra earlier this year, according to an announcement. The partners called the venture LightSquared and have selected Sanjiv Ahuja, a former chief executive of France Telecom’s Orange subsidiary, to run it.

With the deal, Harbinger hopes to meet important financing and coverage requirements set by the Federal Communications Commission as contigencies of the firm’s purchase of SkyTerra. Satisfying those requirements would allow Harbinger to join the race to provide broadband service to the growing horde of wireless customers who are hungry for faster and more powerful devices.

“With a strong management team and a world-class partner to build and manage the network, the business is well positioned to capitalize on key trends; demand for wireless broadband is growing at a rapid pace and there is an increasing need for additional network capacity and reach," said Philip Falcone, chief executive of Harbinger Capital.

In an interview, Ahuja said that LightSquared plans to launch in its first markets by the middle of next year and hopes to have 92 percent coverage of the United States by 2015. He said the venture sees its customer base as a wide-ranging group including wireless carriers, device makers, and retailers such as Best Buy and WalMart that want to provide high-speed mobile services.

"We see a great diversity of customers to put to use one or all three propositions we offer," Ahuja said. "That would be satellite only, satellite and terrestrial or only terrestrial. This is one of its kind."

As a condition of the FCC’s approval of Harbinger’s roughly $280 million acquisition of SkyTerra, the new company cannot lease spectrum on its network to the biggest wireless providers – AT&T and Verizon – without permission from the agency.

That provision is aimed at promoting competition in the next generation of wireless broadband. Clear, former known as Clearwire, has launched in several markets its own 4G WiMax network. Verizon is set to launch its first 4G LTE in certain markets around the end of the year. AT&T is also planning its own 4G launch around the same time.

Under one requirement set by the FCC, Harbinger must build out its network to provide U.S. coverage to 100 million people by the end of 2012, 145 million people by the end of 2013, and 260 million people by the end of 2015.

Harbinger’s agreement with Nokia Siemens is subject to approval from both companies’ boards. The deal includes network design, equipment manufacturing and installation, and network operations and maintenance by Nokia. LightSquared would control 59 Mhz of nationwide spectrum, satellites and 40,000 cell phone base stations.