Ligado Networks filed for Chapter 11 bankruptcy protection on January 6th. Ligado holds some extremely valuable ‘L-band’ spectrum over North America but is in the middle of a bitter dispute with the U.S. government and has accused the U.S. government of improperly blocking it from commercializing licensed spectrum through what it called one of the biggest uncompensated seizures of private property in modern U.S. history.
Ligado says the Chapter 11 bankruptcy gives its breathing space and its restructuring proposal is to trim its debt by some $7 billion (€6.7bn) to around $1.2 billion. Ligado has claimed that its spectrum is worth as much as $39 billion. The dispute centres on what rights the U.S. government has over spectrum that was officially allocated to Ligado by the FCC in 2020. However, the US military (and in particular the Department of Defense) is claiming it wants the spectrum for its own use.
Ligado’s existing creditors who hold some 88 per cent of the firm’s debt have agreed under the restructuring plan “to provide $115 million of additional incremental financing to fund Ligado during the restructuring process,” a Ligado press release stated. This funding is in the form of DiP (Debtor in Possession) and approved by the Delaware bankruptcy court.
AST SpaceMobile (AST), which wants to operate a global satellite-to-cellular phone system, has stepped in and signed an agreement with Ligado which will receive AST SpaceMobile warrants and a $550 million payment, then approximately $80 million annually for spectrum usage rights which will extend for 80 years.
AST will then have rights to 40 MHz of Ligado’s L-band mobile satellite spectrum (MSS) spectrum in the U.S. and Canada, plus access to an additional 5 MHz in the 1670-1675 MHz Band in the U.S.. However, the L-band rights over Europe and elsewhere are controlled by Inmarsat/Viasat.
“Adding premium lower mid-band spectrum access in the United States to the AST SpaceMobile network gives us long-term access to a large block of a scarce resource, significantly enhancing our planned space-based cellular broadband offering,” said Abel Avellan, Chairman/CEO at AST.
The Ligado-AST agreement, revealed by both companies January 6, is contingent on Ligado debtors’ acceptance of the proposed transaction and also dependent on U.S. regulatory approval of AST’s use of the Ligado spectrum.
“The transaction associated with [Ligado’s bankruptcy] is fairly unexpected, in terms of AST agreeing to lease their spectrum, because AST has been all about partnerships with cellular operators and using terrestrial spectrum […] and building satellites to operate in lower frequencies,” said analyst Tim Farrar of TMF Associates. “It’s really a sort of 180 degree turn for AST to basically go and move to MSS [mobile satellite service] spectrum and move to these higher frequencies, whereas they had said they were much better off with the low frequencies which were going to penetrate buildings.”
According to the Ligado statement, the company had been for the past year making an effort “to secure a comprehensive resolution with satellite communications company Viasat to restructure Ligado’s significant payment obligations to Inmarsat, which Viasat acquired in 2023.” Viasat had been planning to partner with Ligado on satellite-to-cellular services.
Meanwhile, Ligado’s lawsuit will be very much on Donald Trump’s ‘In-Tray’ when he assumes office on January 20th.
Farrar’s view, in Breaking Defense said: “The question is, is this new administration going to be willing to settle that lawsuit?” he asked. And that may depend, he suggested, on whether new Trump best pal Elon Musk “is going to weigh in as an example of this not being government efficiency at its finest? […] The problem is if Elon Musk weighs in, because AST is obviously a competitor with Starlink, then all bets are off.”
