Harbinger has to move fast. The Federal Communications Commission is requiring LightSquared to build out a network that can serve 100 million people by Dec. 31, 2012. If it doesn't, the FCC can nullify LightSquared's licenses for the radio frequencies it needs to operate.

Building a network will cost about $5 billion, says Credit Suisse Group AG telecom analyst Jonathan Chaplin. Falcone will have to cover another $3 billion in losses while he hustles for customers, Chaplin says. "It's going to take a lot of capital to get it built, and I'm not sure the capital is available," he says.

Falcone secured a piece of what LightSquared needs in September, getting a $750 million, four-year loan from UBS AG, according to two people familiar with the matter.

Option to Sell

One option for Falcone is to sell his licenses now and forget the fuss of building a network, Chaplin says. Harbinger got the licenses when it completed its purchase of a money-losing satellite company called SkyTerra Communications Inc. in March.

The licenses are probably worth $9 billion today, according to Chaplin. They cost Falcone about $4 billion, including leases on wireless frequencies he signed to complement SkyTerra's, Chaplin says. Any transaction would need approval from the FCC.

Investors will have to wait longer, perhaps for an initial public offering, if Falcone keeps building. McCaw's Kirkland, Washington-based Clearwire, which sold shares to the public in April 2007, has a market value of $7.3 billion.

Whether he builds a telecom system or sells his spectrum, Falcone needs a winner. His $3.4 billion Capital Partners fund is struggling. In 2008, it lost billions making bullish bets on iron-ore producers, including Perth, Australia-based Fortescue Metals Group Ltd., whose stock was down 74 percent for that year. Harbinger lost still more investing in Houston-based power company Calpine Corp., whose shares fell 56 percent in 2008.

Up And Down

Harbinger recouped those losses in 2009, when Calpine, Fortescue and other stocks rebounded. This year, Falcone is down again. As of the end of August, Harbinger's flagship fund had lost 16 percent, partly because of a plunge in the stock of TerreStar Corp., another satellite communications company.