Ligado Networks today announced it has filed for Chapter 11 bankruptcy and is implementing a restructuring plan aimed at reducing its current debt from $8.6 billion to approximately $1.2 billion, largely financed through a deal with satellite-to-phone provider AST SpaceMobile.
In addition, creditors holding about 88 percent of the company’s debt have agreed under the restructuring plan “to provide $115 million of additional incremental financing to fund Ligado during the restructuring process,” as detailed in Ligado’s press release.
The bankruptcy filing, made in the US Bankruptcy Court for the District of Delaware, was anticipated. The company had signaled this possibility since last year when it initiated legal action against the Defense and Commerce Departments, alleging they had unlawfully “seized” its L-band spectrum license.
This license, granted by the Federal Communications Commission (FCC) in 2020, has been contentious, with protests from the Department of Defense (DoD), Commerce, and other government agencies, asserting that Ligado’s cellular use of the spectrum would disturb GPS signals used by military operations, commercial aviation, and other sectors. Ligado has challenged these claims.
The agreement with AST involves leasing 45 MHz of Ligado’s mid-band spectrum—central to the DoD dispute—for use in AST’s low Earth orbit satellites, which connect to cellular phones. This move surprised industry veteran Tim Farrar, who noted that AST had primarily focused on partnerships with terrestrial cellular operators and operating in lower frequency ranges.
Per Ligado’s press release, AST “has agreed to provide Ligado, subject to certain conditions, approximately $113 million in AST SpaceMobile warrants and usage rights payments to support Ligado’s obligations under some spectrum agreements. Furthermore, Ligado will participate economically in AST SpaceMobile’s direct-to-device business in the U.S. and Canada.”
AST, in a statement, expressed that this deal would enhance its service offerings. “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,” stated Abel Avellan, Chairman and CEO of AST SpaceMobile.
Farrar predicted that Ligado might “hive off” parts of its business while retaining one geosynchronous satellite to maintain its spectrum license and continue making necessary lease payments to Viasat. Ligado has been working over the past year to reach a resolution with Viasat to restructure significant payment obligations linked to Inmarsat, recently acquired by Viasat.
Another Coming Twist with Trump?
The company also reiterated that it would continue its lawsuit against the federal government, which could potentially provide a revenue stream to settle debts. “Ligado will vigorously pursue its litigation against the U.S. government to enforce its constitutional right to just compensation for the unlawful taking of its licensed L Band spectrum,” said Doug Smith, president and CEO of Ligado.
However, Farrar noted that the company might seek an out-of-court settlement with the incoming Trump administration. During Trump’s initial term, federal officials strongly supported the mobile telecom industry’s push for access to spectrum historically used by government entities and satellite companies for 5G network development. Trump’s FCC Chair nominee, Brendon Carr, backed Ligado’s application while in office.
Yet, Farrar pointed out numerous complexities affecting the lawsuit’s outcome and Ligado’s restructuring plans. “The question is whether this new administration will be willing to settle that lawsuit?” he questioned, noting potential influences from new Trump advisor Elon Musk, who competes with AST through SpaceX’s Starlink.
As SpaceX consolidates partnerships with terrestrial wireless providers for satellite-to-phone services, it may have to pivot strategy as companies like AST utilize satellite-allocated spectrum. Moreover, government agencies, including the FCC, must approve the Ligado/AST deal, which could be influenced by a new NTIA study concerning potential interference with GPS from direct-to-device networks.
The NTIA, which oversees spectrum use by federal agencies, is grappling with an impending “direct to device” boom, balancing GPS interference concerns from the Pentagon while recognizing DoD’s interest in secure satellite links for field operations.
