LightSquared's ongoing failure to get the green light for its LTE network has made it something of a bad luck charm for its main backer, hedge fund Harbinger Capital Partners.
Investors found out just how bad yesterday when the fund reported a 47 percent drop in the value of its main portfolio on LightSquared-related write-downs. Harbinger has sunk $3 billion into LightSquared, its biggest investment.
"The decline in the portfolio value was primarily due to a conservative adjustment in the Fund's holdings of LightSquared, to be consistent with the results of work done by the Fund's third party valuation firm," Harbinger spokesman Lew Phelps said in a statement. "The valuation takes into account uncertainty about the outcome of political issues related to alleged interference with the GPS system by LightSquared transmitters."
"Uncertainty" is putting it mildly. For months, LightSquared has waged an unsuccessful battle to get the FCC to allow it to launch a wholesale LTE network in satellite spectrum near GPS bands.
A series of government tests showed LightSquared's signal knocked out a wide swath of GPS receivers, especially highly sensitive units used by the military and aviation industries. The FCC says it will not allow LightSquared to go live until it sorts out problems with GPS interference.
LightSquared claims the tests were rigged and has accused the government of colluding with the GPS industry.
Meanwhile, a senator claimed LightSquared had offered him a bribe to get him to back off an inquiry into why the FCC granted LightSquared a conditional waiver for its service last January over the concerns of the NTIA and GPS industry. LightSquared denies the allegations.
Harbinger "continues to work closely with LightSquared to obtain a favorable outcome," Phelps said.
Harbinger's grim financial news came two days before the House Aviation Subcommittee is set to hold a hearing on protecting GPS service. The threat from LightSquared's network was not mentioned in the announcement of the hearing, but is bound to come up.
Wisconsin Republican Tom Petri, who chairs the committee, has been a vocal critic of LightSquared and has objected to the company's claim that the GPS industry, not its network, is to blame for interference problems.
LightSquared executives are not among the witnesses slated to speak at the Wednesday hearing, which will include testimony from Transportation Department Deputy Secretary John Porcari, United Nation's aviation bureau executive Vincent Galotti, Garmin GNSS technology director John Foley and Scott Pace, director of George Washington University's space policy institute.