According to a Thursday report in The Wall Street Journal (WSJ), the Reston, Virginia-based LightSquared is in for yet another setback, with Sprint Nextel having apparently decided to pull the plug on its proposed 15-year 4G network contract with the impending hybrid network operator.

As per the details shared in the WSJ report, the Sprint-LightSquared partnership was scheduled to expire on Thursday; and Sprint's plans to terminate the contract implies that the carrier will have to return the $65 million amount which LightSquared had given in prepayments.

The July 2011 announced agreement between the two companies essentially included plans for Sprint to host LightSquared's radio spectrum on its Network Vision infrastructure; with LightSquared to make a $9 billion cash payment to Sprint for that hosting which would spell a $13 billion saving for the startup over a period of eight years. The partnership would have provided Sprint some extra spectrum needed for running its own planned LTE network.

Sprint's decision to terminate its partnership with the foundering LightSquared comes as a big blow to the company, especially after the US Federal Communications Commission (FCC)'s February proposal to annul the would-be carrier's authorization for developing a land-based network.

The FCC had said in its last-month announcement that it intends suspending "indefinitely" the conditional waiver obtained by LightSquared for commencing its operations after it was found that the startup could not avoid its alleged interference with other devices, including GPS devices.