Sprint Drops Planned Partnership with LightSquared

Wireless carrier Sprint Nextel ended its spectrum hosting agreement with start-up LightSquared, whose network looks doomed because regulators say it interferes with GPS navigation devices.

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Sprint is returning $65 million in prepayments to LightSquared.

The deal between the companies had called for Sprint to collaborate with LightSquared on its LTE, or long-term evolution, network. Sprint said Friday that LightSquared has so far been unable to find a way to resolve interference issues.

LightSquared, backed by hedge-fund manager Philip Falcone's Harbinger Capital Partners, said in a statement that Sprint's decision to end the agreement was not unexpected, given regulators' actions. Last month the Federal Communications Commission blocked LightSquare's plan to build a wireless network.

The end of the deal won't hurt customers, Sprint said. The country's No. 3 wireless carrier is also upgrading its own network to use LTE technology, and said it will launch its 4G LTE network in the middle of 2012.

Analysts have said that absorbing the cost of upgrading its data network over the next few years will be a big challenge for Sprint.

The Overland Park, Kan., company's stock edged down on Friday. (Click here to see the latest Sprint quote)