Verizon gazumps AT&T to buy Straight Path

Verizon has snatched Straight Path from under AT&T’s nose, outbidding its rival to pay $3.1bn for the holder of LMDS spectrum licences.

The all-stock deal equates to $184 per share and Verizon will also pay a termination fee of $38m to AT&T, which had bid $1.6bn. Verizon came in with an initial bid of $1.8bn, which was then increased to $2.3bn and then $3.1bn in the space of under two weeks. AT&T had until last Wednesday to beat the final offer, but declined.

That means AT&T has lost the chance of a broad footprint of high frequency spectrum in which to deploy fixed 5G. It secured some 39 GHz licences with its recent purchase of Fibertower while Verizon gained the rights to 28 GHz spectrum as part of its acquisition of XO Communications. Now it has added Straight Path’s 28 GHz and 39 GHz holdings.

Virginia-based Straight Path holds 735 licences for in 39 GHz plus 133 licences in 28 GHz. These licences cover the entire US, including the top 40 markets, with an average of 620 MHz in the top 30 markets. This represents about 95% of the commercially available 39 GHz licences and a significant portion of available 28 GHz spectrum, the company says.

“Verizon now has all of the pieces in place to quickly accelerate the deployment of 5G,” said Hans Vestberg, president of global network and technology at Verizon, in a statement.

The two US carriers both want to test and deploy 5G in high frequency spectrum, initially to support fixed wireless and extend their reach beyond their fiber territories.

The FCC has pledged to open up almost 11 GHz of millimeter wave spectrum for licensed 5G services, in the 28 GHz, 37 GHz and 39 GHz bands (as well as more in 64-71 GHz). AT&T and Verizon are trying to steal a march before those auctions take place, hence their race to acquire companies which ended up with the LMDS licences which underpinned the last US mmWave goldrush, in the late 1990s. This led to a shortlived broadband wireless bubble which promptly burst, leaving the three main spectrum owners in Chapter XI. Their assets were subsequently bought up, at knockdown prices, by new entities, which are now being pursued by the big telcos, promising them an overdue but hefty pay-off.

Once Level 3, XO and FiberTower had been snapped up, Straight Path was the logical next target. Last year, the company came to a settlement with the FCC, which will force it to divest its 28 GHz and 39 GHz licences and impose penalties, following an investigation into failure to deploy wireless services as required under FCC licensing rules.
After the FCC decision, Straight Path raised new funding and said it was reviewing strategic alternatives with investment banking advisory firm Evercore, and that it would continue to develop 5G technology, including hardware and software it has designed for fixed wireless in its Gigabit Mobility Lab in Plano, Texas.

Cableco Charter Communications has been working with Straight Path to plan tests of equipment in 28 GHz in Orlando, and the UK’s CBNL, a specialist in wireless backhaul and point-to-multipoint, has a deal to supply equipment running in Straight Path spectrum to Windstream, which is expanding its fixed wireless network.