2ND UPDATE: LightSquared's Ahuja Resigns As CEO In Shakeup
February 28 2012 - 6:49PM
Dow Jones News
LightSquared Inc.'s chief executive and an executive vice
president stepped down in the wake of a regulatory setback that has
forced the wireless venture to rethink its multibillion-dollar
strategy to roll out a new fourth-generation network.
Sanjiv Ahuja left the CEO post this month after working without
a contract since July, according to people familiar with the
situation. Martin Harriman, the executive vice president of
ecosystem development and satellite business will also leave the
company, said one of the people. Ahuja will remain chairman and
billionaire Philip Falcone, whose Harbinger Capital Partners hedge
fund is LightSquared's principal backer, will join the board to
assist in the search for a new CEO.
LightSquared faces an uncertain future. The Federal
Communications Commission this month said it would revoke a waiver
that would allow the company to use satellite airwaves for a
terrestrial network, citing concerns the network may interfere with
Global Positioning System signals. The company received the
conditional FCC waiver last year and hoped to compete with AT&T
Inc. (T), Verizon Wireless and others in selling wireless airwaves,
or spectrum, wholesale to wireless carriers.
The company has said it is the victim of biased testing and said
GPS device manufacturers should be required to pay for filters to
protect their equipment from signal interference. In the meantime,
it is considering a plan to swap its spectrum with some held by the
Defense Department as a last-ditch effort to resolve the GPS
interference concerns.
Chief Network Officer Doug Smith and Chief Financial Officer
Marc Montagner were named interim co-chief operating officers as
LightSquared undertakes the search for a new CEO.
A spokesman for LightSquared declined to comment on whom the
company was considering for the position. The company's board of
directors will meet on Thursday to discuss CEO candidates, among
other matters, two people said.
This month, Harbinger cut nearly half of its workforce and now
employs fewer than 200 people.
Harbinger last year told investors that it lost 47% of the value
in its biggest fund because of a markdown in the value of
LightSquared. The losses helped cause Harbinger's firmwide assets
to plunge to $4 billion, from a high of $26 billion in 2008.
Investors have been barred from pulling their money from Harbinger
for months.
Harbinger, of New York, also is facing a lawsuit from investors
seeking a return of funds they lost as a result of the LightSquared
investment.
The company last year signed a 15-year accord with Sprint Nextel
Corp. (S) to share the costs of building their respective 4G LTE
networks, an arrangement LightSquared estimated could save it as
much as $13 billion through the end of the decade. Sprint has the
right to terminate the agreement as soon as March 16 if
LightSquared cannot get final approval to operate its network,
though it would have to return at least $65 million in
prepayments.
LightSquared has said it has enough money to operate for several
quarters, though it hasn't given specifics.
-By Greg Bensinger, Dow Jones Newswires; 212-416-4676;
greg.bensinger@dowjones.com
--Nathalie Tadena contributed to this article.
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