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Verizon to Acquire Straight Path Spectrum to Accelerate 5G Deployment PDF Print E-mail
Wednesday, 17 May 2017 06:04


To scale and accelerate deployment of next-generation broadband services throughout the United States, Verizon Communications Inc. has signed an agreement to acquire Straight Path Communications Inc. a holder of millimeter wave spectrum configured for 5G wireless services.

Verizon will purchase Straight Path for $184.00 per share, or a total consideration of $3.1 billion, in an all-stock transaction. The transaction is anticipated to close within nine months, subject to FCC review.

Based in Glen Allen, Va., Straight Path holds millimeter wave spectrum configured for 5G services, including 39 GHz licenses that serve the entire country and 28 GHz assets in major markets.

"Verizon now has all of the pieces in place to quickly accelerate the deployment of 5G," said Hans Vestberg, executive vice president and president of global network and technology at Verizon. "Combined with our recent transactions with Corning Incorporated, XO Communications, and Prysmian Group, this is another step to build the next-generation network for our customers."

The $184 per share all-stock offer represents a discount of 17.8 percent to Straight Path's recent close. The stock had surged nearly five-fold since April 7, a day before AT&T made the first move with a $95.63 per share offer.

Straight Path is one of the largest holders of millimeter wave spectrum, which is expected to play a large role in 5G. In general, 5G is expected to boast higher speeds, shorter response times and more capacity.

The spectrum is particularly important for 5G broadband services that AT&T and Verizon hope to launch to better compete with high-speed Internet offerings from cable companies.

The frenzy around Straight Path started after an anonymous short-seller tipped off regulators in November 2015 that the company had not built communications systems as it had claimed, leading to an investigation by the U.S. Federal Communication Commission. The company settled with the FCC and put itself on the block in January.

Verizon will pay, on behalf of Straight Path, a termination fee of $38 million to AT&T. The deal is expected to close within nine months, pending review by the FCC. As part of the earlier settlement with FCC, Straight Path will pay the U.S. government a 20 percent cut from the sale of its spectrum licenses.

Straight Path is one of the largest holders of millimeter wave spectrum, which is expected to play a large role in 5G. In general, 5G is expected to boast higher speeds, shorter response times and more capacity.

The spectrum is particularly important for 5G broadband services that AT&T and Verizon hope to launch to better compete with high-speed Internet offerings from cable companies.