Hedge fund manager Philip Falcone told investors he will not quit plans to build a national mobile broadband service even after the startup wireless company he is backing suffered a serious regulatory blow this week.

On an hour-long conference call with investors on Friday, the billionaire investor sounded a defiant note, saying he is working on ways to salvage LightSquared Inc, according to two investors that Reuters spoke with.

Falcone has funneled billions of dollars into the Reston, Virginia-based company which is the biggest holding in his $4 billion Harbinger Capital Partners portfolio.

Earlier this week the Federal Communications Commission said it plans to revoke LightSquared's provisional approval to build out its network after tests showed it would interfere with the global positioning system used by the military and for commercial applications ranging from navigation to precision timing.

This led some analysts to speculate that bankruptcy may be close at hand for LightSquared, which had earlier warned that it would run out of money early this year. Falcone ruled out a bankruptcy filing.

According to sources familiar with LightSquared, the company, which is due to make a $56 million payment to satellite partner Inmarsat this weekend, has enough money to keep going for a few more quarters.

Several investors said the conference call offered little new insight or hope that they might be able to retrieve their money.

Falcone, who pulled in billions of dollars in cash after his savvy bet several years ago that subprime loans would sour, has not permitted his investors to get their money out for months.

His flagship Harbinger fund gave up 47 percent of its value last year, in large part because of a sharp markdown on the value of the LightSquared investment.

For the 49-year-old hedge fund manager the current showdown with communications regulators is only his latest problem.

Last year he was warned that he and top lieutenants are being probed for possible securities violations and many investors have still not forgiven him for having borrowed money from the fund to pay his personal taxes when they could not access their money.

(Reporting By Svea Herbst-Bayliss and Sinead Carew; Editing by Tim Dobbyn)

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