[Satellite News 03-01-11] Harbinger Capital Director Philip Falcone is restructuring the hedge fund’s investment in satellite 4G-LTE operator LightSquared to “facilitate direct investments by existing and prospective investors in the master fund’s holdings in LightSquared and the management of such holdings,” Harbinger announced Mar. 1.
    Harbinger has $3 billion invested in the Reston, Va.-based company, which aims to build a high-speed, satellite-hybrid broadband network that will sell wholesale wireless service to major telecom carriers. Liberum Capital Analyst Mark James said that Harbinger’s current investor consortium has been voicing concerns to Falcone over the fact that his LightSquared stake accounts for nearly half of the hedge fund’s $6 billion in total assets.
    “Some investors are not happy at all with LightSquared’s long-term revenue-generating plan and that Harbinger’s heavy hand in LightSquared may make it a struggle for the fund to honor investors’ redemption requests,” James told Satellite News. “You have to remember that the Harbinger flagship fund ended 2010 with a 12 percent decline during a year when other hedge funds were growing by an average of 10 percent. That makes investors nervous.”
    While LightSquared has about $1.3 billion in short-term financing secured from UBS and JP Morgan Chase, the company needs to raise at least another $5 billion to finish building out its network. That total prompted some of the hedge fund’s investors, including Blackstone, Goldman Sachs and the New York State Common Retirement Fund, to send redemption requests to Harbinger in January.
    “I think it’s just a matter of settling nerves,” said James. “The restructuring process comes at a good time for Harbinger to bring on more support and ease the worries of its investors.
    Separately, LightSquared and the U.S. Global Positioning System Industry Council (USGIC) filed their first joint report to the U.S. Federal Communications Commission (FCC) following the formation of a technical cooperation group Feb. 28 to study potential interference problems the LightSquared network might pose on GPS systems.
In the report, LightSquared and the USGIC outlined milestones for providing the FCC with details and progress reports about test plans and procedures. The working group said it would file monthly reports through June to providing the commission with more details about test plans and procedures.
   The formation of the LightSquared-USGIC group follows a report filed in January to the FCC by Garmin engineers Scott Burgett and Bronson Hokuf that asserted that the stronger signals created by the LightSquared mobile network base stations and the SkyTerra-1 satellite would “seriously limit GPS reception, causing widespread GPS jamming and depriving vast areas of the United States of GPS coverage.”
   According to the report, the results of the test showed tha, “GPS signals began to experience interference [from the LightSquared signal] when 5.8 kilometers or closer to the simulated LightSquared transmitter and lost the fix altogether when 1.1 kilometers away. Interference started at 22.1 kilometers for the aviation receiver, and total loss of fix occurred at 9 kilometers from the transmitter.”
    If accurate, the Garmin report would place LightSquared in violation of the provisional permit it received from the FCC, which stipulated that the network should not cause interference with other signals. The FCC also granted a LightSquared request in January to drop its requirement that mobile phones using satellite airwaves must be able to communicate with satellites.