Sprint, already dealing with the possible threat of AT&T merging with T-Mobile, is apparently close to making a big deal of its own. According to a story on the Bloomberg Businessweek web site, Sprint is about to accept a $20 billion deal with LightSquared. This new deal, if it goes through, is supposed to last 15 years. It will allow LightSquared to build up its plans for a 4G LTE based wireless network more quickly. Spring will assist LightSquared in constructing its network. At the same time, Spring will get a big cash infusion.
The article, which cites unnamed sources, claims that Sprint will get $2 billion annually for the first few years of the agreement to help with the 4G LTE network's construction costs. After that, Sprint will get payments from LightSquared based on the company's number of customers and network usage. LightSquared's business model is to offer up wholesale wireless access to large companies and let them become wireless carriers. For example, Best Buy uses LightSquared's network for their own Best Buy Connect service.
The deal, if it happens, will also help Sprint launch its own LTE-based 4G wireless service. Sprint partnered with Clearwire to launch its own 4G service. While it was the first carrier to have such a service, it's also based on the WiMax technology. Verizon's 4G network is based on LTE, as is AT&T's 4G network when it launches later this summer, and so far LTE has proven to have better performance than WiMax.
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