Verizon buys Straight Path
Will pay $3.1 billion in all-stock deal,
Verizon just bought a booster for its 5G future.
The telecommunications giant will pay about $3.1 billion in an all-stock deal to acquire Straight Path Communications, which holds a treasure trove of wireless licenses useable in future superfast next-generation 5G mobile and fixed broadband services.
Straight Path, based in Glen Allen, Va., holds valuable spectrum licenses — in the high-frequency bands of 28 gigahertz and 39 GHz — for which devices and services are expected to be deployed over the next few years. These 5G services promise much faster speed than current wireless tech, as well as better connectivity and improved battery life.
“Think of it as Wi-Fi on steroids,” said Roger Entner, founder of Recon Analytics.
Beyond mobile service, 5G can supply improved wireless home broadband and connect a menagerie of connected devices, which Intel expects to grow from 2 billion in 2006 to 200 billion by 2020.
Telecom providers are racing to secure spectrum for 5G delivery. T-Mobile spent nearly $8 bil- lion, its largest investment ever, in the recent FCC auction as part of its 5G plans.
Both AT&T and Verizon have announced 5G trials to begin later this year. Eventually, 5G wireless can deliver speeds beyond 1 Gigabit per second (current mobile networks typically deliver in the tens of megabits per second).
5G standards have not been finalized, “but this gives Verizon an early lead on this high-frequency spectrum,” Entner said.
The acquired swaths of millimeter wave spectrum can be used for 5G services nationwide, in the case of 39 GHz licenses and the major markets (28 GHz), Verizon says.
Verizon will pay $184 per share of Straight Path stock, almost twice what AT&T said it would pay for the company last month.
Shares of Straight Path dropped 20% to $178.11. Investors had hoped the bidding war would continue, pushing shares as high as $235.88 on Tuesday. They closed Wednesday at $233.79. After AT&T’s bid became public, another unnamed bidding rival emerged, which Wall Street unearthed as Verizon.
Verizon also will pay AT&T a $38 million termination fee.