Sprint Nextel Corp. plans to end a network-sharing agreement with billionaire Philip Falcone's LightSquared Inc. wireless venture as early as next week, according to two people familiar with the matter.
Sprint is preparing to take the step as LightSquared approaches a March 15 deadline to meet certain conditions under the agreement, said the people, who wouldn't be identified because the information isn't public. Sprint and LightSquared struck an 11-year deal to share network expansion costs and equipment in June provided LightSquared secure regulatory approvals for its wireless service by December. Though Sprint pushed the deadline back, it doesn't plan more extensions, the people said.
The loss of Sprint would fuel concerns about the viability of LightSquared and mark another setback for Falcone. The hedge fund manager has invested about $3 billion from his Harbinger Capital Partners in LightSquared in an effort to create a national wireless carrier to compete against AT&T Inc. and Verizon Wireless. Harbinger managed about $4 billion at the end of last year, down from a peak of $26 billion in mid-2008.
Terry Neal, a LightSquared spokesman, and Scott Sloat, a Sprint spokesman, declined to comment. Lew Phelps, a spokesman for Falcone, said he had no comment.
Sprint shares rose 1.7 percent to close at $2.43. Another Sprint network partner, wholesale carrier Clearwire Corp., climbed 4.8 percent to $2.18.
Under their agreement last year, Overland Park, Kan.-based Sprint was to build and operate LightSquared's network for 11 years in exchange for $9 billion in payments and an additional $4.5 billion in service credits. Sprint extended the deal's deadline as the Federal Communications Commission considered whether to allow LightSquared to convert airwaves originally designated for satellite service for communication with land-based, or terrestrial, radio towers.
The FCC said last month it would block LightSquared's planned network because of potential disruptions to global-positioning systems. The company said after the decision that it remains committed to finding a solution to the concerns.
In the wake of that decision, Chief Executive Sanjiv Ahuja resigned and Falcone was appointed to the board as the company began a search for a new CEO. The company also cut 45 percent of its 330-member staff to preserve cash.