AT&T acquires Straight Path, with spectrum, for Dollars 1.25 bln

13 April, 2017, 01:36 | Author: Celia Hoffman
  • AT&T fuels 5G ambitions with $1.6B Straight Path buy

The race to provide 5G service has been heating up, with AT&T acquiring privately held FiberTower and its millimeter wave spectrum rights earlier this year and Verizon Communications, the No. 1 USA wireless carrier, closing on its acquisition of XO Communications' fiber-optic network business for about $1.8 billion.

The Straight Path deal will net AT&T 735 millimeter wave licenses in the 28 GHz and 39 GHz bands to go alongside the 39 GHz holdings it's getting from FiberTower.

Straight Path, which was bought by AT&T was one of the largest holders of 28 and 39 gigahertz millimeter-wave spectrums - frequencies approved to power the fifth-generation of wireless services, or 5G. The Virginia company owns a large nationwide portfolio of spectrum, or airwave licenses. AT&T's purchase came at a right time when rumors of rival Verizon's plan to buy Comcast continue to swirl.

According to the initial report from MarketWatch, Straight Path shareholders are in line to receive $95.63 a share in AT&T stock. The licenses will cover the entire USA, including the top 40 markets. The transaction needs clearance from the FCC. The ITU, which is the standards body now working on 5G specifications, has said that standards-based 5G deployed in the mmWave spectrum can deliver services that offer up to 10 Gb/s speeds in the uplink and 20 Gb/s speeds in the downlink.

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In February AT&T and Nokia showed in a test that they could offer DirecTV Now via a fixed wireless 5G connection using 39 GHZ mmWave technology.

The second largest wireless carrier in the US said it was offering $95.62 per share, which represented a 162% premium over the close of Straight Path stock on Friday.

Straight Path Communications has only a handful of its employees, and it's not entirely clear what the company actually does. The transaction value is said to have a total value of $1.6 billion, if you include the liabilities and amounts to be paid to the FCC per the terms of Straight Path's January 2017 consent decree.

The transaction is subject to regulatory review, and expected to close within 12 months.

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