NEW YORK (Reuters) - LightSquared plans to pay Sprint Nextel <S.N> $9 billion over 11 years to build a high-speed wireless network that the Harbinger Capital-backed telecommunications startup will use to sell wholesale services.
Under the agreement, LightSquared, which was founded by Harbinger's manager Philip Falcone, will help Sprint pay for a network upgrade it is planning. By using Sprint's network, LightSquared cuts its construction and operating costs by as much as $13 billion, the companies said on Thursday.
Also under the long-awaited agreement Sprint has the option to buy up to half of LightSquared's network capacity.
But before it can build its network, LightSquared has to prove to U.S. regulators that it can eliminate interference problems with satellite services used in everything from airline navigation to agriculture and construction.
The network will be based on a new technology known as Long Term Evolution (LTE).
Under the agreement, LightSquared customers can use Sprint's slower third generation network in market where the faster network is not available.
LightSquared repeated its goal of launching service in its first markets in 2012.
(Reporting by Sinead Carew; editing by Derek Caney)