"Hedge fund Harbinger Capital Partners has tapped Sanjiv Ahuja, the former chief executive of France Telecom SA mobile unit Orange, to head up its risky effort to create a new high-speed wireless network in the U.S., people familiar with the matter said Tuesday.
Harbinger is also in talks with potential strategic investors for the venture. They include Qwest Communications International Inc. and SK Holdings Co., people familiar with the matter said Tuesday. Harbinger is attempting to raise somewhere between $1 billion and $2 billion in equity and bank financing to fund the venture.
Harbinger had hoped to announce investments by the two companies and the hiring of Mr. Ahuja as chief executive this week, but completing the talks have taken longer than expected, people familiar with the matter said.
Sticking points include disagreements over the size of the individual investments and related equity stakes, as well as disputes over the composition of the board, one of those people said. Having spent four years and more than $2 billion on the venture so far, Harbinger CEO Philip Falcone is trying to retain as much equity as he can in the venture, one person said.
Harbinger continues to hold talks with Qwest, SK Holdings and other potential investors. Qwest declined to comment. SK Holdings couldn't be reached.
Harbinger Chief Executive Philip Falcone, betting there won't be enough capacity to satisfy rising demand for mobile data services, wants to offer high-speed wireless service on a wholesale basis using satellite spectrum owned by his fund.
The target customers would be phone companies, cable operators and others that want to offer wireless service in under-served areas.
The plan poses tricky financial, technological and managerial challenges.
Two of the biggest failures of the 1990s were satellite phone providers Iridium and GlobalStar.
The handsets were expensive and bulky, and sales didn't support the high cost of operating the companies.
Bringing strategic investors on board would help begin to answer questions about whether the venture is feasible and can be financed.
Harbinger plans to start offering the service in two trial markets, Phoenix and Denver, where Qwest has headquarters, with a commercial launch before the third quarter of 2011.
Qwest, SK Holdings and other investors could help with capital costs and the network build-out, as well as providing operating expertise, the people familiar with the matter said.
Another question mark has been the venture's management team. Mr. Ahuja, a former IBM executive who ran mobile-service Orange from 2004 to 2007, could bring operating experience and credibility to the venture."
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