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Bid could help Charlie Ergen build a top U.S. carrier -- with or without Sprint Nextel

The fall of LightSquared and hedge fund manager Phillip Falcone was well documented.  For a time it looked like the service provider would become a key partner to Sprint Nextel Corp. (S) with its ambitious satellite LTE scheme.  

Then came the news that the satellite transmissions would interfere with roughly 75 percent of global positioning service (GPS) receivers -- a debacle that caused the U.S. Federal Communications Commission to reject LightSquared's bid in the eleventh hour, despite giving a conditional approval that critics say was bred from Mr. Falcone's close relationship with the Obama administration.  In the aftermath of the FCC rejection, Sprint dumped LightSquared, LightSquared went bankrupt, and Mr. Falcone was accused of defrauding investors.

But the company still holds valuable spectrum, and in the midst of its Chapter 11 bankruptcy it reportedly has received a major bid for that spectrum that could help Mr. Falcone trim his losses and pay of debt, relieving bitter shareholders.

The bid for spectrum was first reported by Bloomberg and is reportedly the work of DISH Network Corp. (DISH) CEO, chairman, and founder Charlie Ergen.

Charlie Ergen
In the midst of his bid for Sprint, DISH CEO and founder Charlie Ergen is looking to make LightSquared's spectrum holdings his latest chunk of acquired spectrum.
[Image Source: AllThingsD]

Mr. Ergen has been aggressively buying spectrum for some time now, dreaming of founding a large U.S. cellular carrier.  Mr. Ergen is currently competing with Japan's fastest growing mobile carrier, Softbank Corp. (TYO:9984) to buy Sprint.

A judge must approve the so-called "stalking-horse agreement" (a bid that sets the minimum price for an auction-style sale), and the deal must be agreed to before the end of the month, according to Bloomberg's sources.

In March LightSquared entered an armistice of sorts with shareholders, obtaining a small $5M USD loan in exchange for moving ahead into Chapter 11 bankruptcy.  Mr. Falcone last week also settled up with the U.S. Securities and Exchange Commission, paying a $18M USD fine for alleged borrowing $113M USD from one of his hedge funds to pay his taxes.

Mr. Ergen's DISH already has received permission to set up a cellular network from the FCC.  So if his bid for Sprint fails, he may opt to enter the market anyways, using his horded spectrum to establish a fifth major U.S. carrier brand.

LightSquared is still hopeful that some of the spectrum it owns can be used for cellular networks (and hence of value) via the use of protective "buffers" around its portion of spectrum bordering the GPS blocks.

Source: Bloomberg



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Best Negotiator Ever
By Shadowself on 5/21/2013 9:14:12 AM , Rating: 2
Charlie Ergen is definitely the best negotiator that I have ever met or even spoken with. He makes the late Steve Jobs seem like a babe in the woods. Charlie is the world's expert at brinkmanship.

In the very first DBS satellite slot auction back in the early 90s Charlie bid MCI up on the primary slot (that Charlie didn't even want in the first place). He bid MCI up and got MCI to spend several hundred million dollars ($600+ million, IIRC) just for the right to put a satellite up into that slot. Then he got the neighboring slot (the one he really wanted) for comparatively peanuts because MCI couldn't afford to bid against him. It was classic to watch. The list of these kinds of exploits by Charlie goes on and on.

It will be interesting to watch how this falls out.




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