The Dallas Morning News
With eye on 5G, AT&T grabs firm for spectrum
Dallas-based AT&T is racing to build a 5G network with the faster speeds and reliability to support video streaming; virtual and augmented reality; connected home, car and health devices; and self-driving cars.
The telecom giant says it’s getting a step closer by acquiring Straight Path Communications. The Virginia company owns a large nationwide portfolio of spectrum, or airwave, licenses. The acquisition, announced Monday, has a total value of $1.6 billion. That total includes the liabilities and amounts that Straight Path must pay the FCC from a previous settlement.
Straight Path shareholders will receive $1.25 billion, or $95.63 per share, paid in AT&T stock, according to an AT&T news release.
The Federal Communications Commission will review the acquisition. AT&T said it expects the deal to close within 12 months.
AT&T said that Straight Path’s portfolio will complement the spectrum licenses that it got in January through
the acquisition of FiberTower.
Straight Path had an incentive to seek buyers after a settlement with the FCC, said Matthew Kanterman, a tech and telecom analyst with Bloomberg Intelligence. The FCC penalized the company for not meeting infrastructure build-out requirements for its spectrum licenses. It faced a $100 million fine or a lesser fine of $15 million plus 20 percent from sales of its licenses if the company was sold.
The company’s spectrum portfolio appealed to AT&T as the company looks to a 5G future. Straight Path owns large numbers of 39- and 28-gigahertz licenses, the two primary high-frequency bands of spectrum planned for use in the 5G rollout in the U.S.
AT&T got some of those licenses with FiberTower but will get a much larger swath with the Straight Path acquisition. “This is their [AT&T’s] land grab,” Kanterman said. “This is them staking their claim to a position in the market.”
With the Straight Path deal, he said AT&T is “future-proofing their spectrum portfolio for the eventual rise of 5G.”
Wireless carrier rival Verizon made its own 5G land grab. It recently finalized its $1.8 billion acquisition of XO Communications, a deal that included 28-gigahertz and 39-gigahertz licenses.
AT&T has been testing 5G technology. Last fall, AT&T and Ericsson worked together in demonstrations. In February, AT&T and Nokia delivered AT&T’s live video streaming service, DirecTV Now, over a fixed wireless 5G connection during a test.
AT&T is in the middle of a $108.7 billion merger with Time Warner. The New York media and entertainment company owns a treasure trove of content and networks, including HBO, Turner’s channels of TNT, TBS and CNN, and Warner Bros. Entertainment.
With the acquisition of Straight Path, AT&T has become the U.S. carrier with the most 5G spectrum. It’s at the top of the list, along with Verizon, which is close behind.