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TerreStar Affiliates Reject Sprint's $104 Million Claim

Satellite Technology

Satellite Technology Feature Article

June 21, 2011

TerreStar Affiliates Reject Sprint's $104 Million Claim

By Beecher Tuttle, TMCnet Contributor



Affiliates of the bankrupt telecommunications firm TerreStar Networks are disputing a $104 million bill from Sprint Nextel (News - Alert), claiming that the invoice is based on a flawed interpretation of an earlier Federal Communications Commission ruling.

Four business units of the company – including TerreStar (News - Alert) National Services and TerreStar Canada –have asked the U.S. Bankruptcy Court in Manhattan to reject Sprint's reimbursement claims, according to Reuters.

Sprint's demands are based on an FCC (News - Alert) ruling that requires spectrum licensees to help owners cover certain fees, including those related to spectrum band clearing. The affiliates have claimed that they are not responsible for the fees because it was their parent company – not them – that was named as a licensee, says Reuters (News - Alert). The TerreStar entities have also noted that Sprint is being over reliant on the FCC viewpoint.

The Monday filing comes just days after TerreStar accepted Dish Network as the opening bidder in its upcoming bankruptcy auction. The $1.375 billion all-cash bid will put the satellite company in prime position to purchase the fleeting telecom provider.

Other prospective bidders will now need to trump Dish Network's offer by at least $55.5 billion to acquire TerreStar, according to The Wall Street Journal. If that occurs, Charlie Ergen's Dish Network will receive a $27.5 million breakup fee.

Walter Piecyk, an analyst at BTIG, told Bloomberg that Dish Network is lusting after TerreStar’s wireless spectrum, which is quickly becoming a vital asset in the mobile market.

“Owning this asset enables someone to deliver what we think will be a huge demand for wireless data,” Piecyk said.

If the bid is successful, TerreStar would represent Dish Network's third major acquisition in recent months. Dish recently purchased fellow satellite company DBSD North America and movie rental chain Blockbuster, which it also bought out of bankruptcy.

The auction is tentatively scheduled for June 30. 

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Beecher Tuttle is a TMCnet contributor. He has extensive experience writing and editing for print publications and online news websites. He has specialized in a variety of industries, including health care technology, politics and education. To read more of his articles, please visit his columnist page.

Edited by Jennifer Russell


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