AT&T just made a big bet on 5G connectivity

Straight Path Communications Buyout Blindsides Short Sellers

Straight Path owns a portfolio of millimeter wave spectrum, including 39 GHz and 28 GHz licences.

Charles King, the principal analyst with Pund-IT, Inc., told eWEEK "the AT&T deal shows that the company is moving aggressively to ensure its place at the 5G table". With this acquisition that shouldn't be an issue for AT&T.

In total, AT&T will acquire 735 mmWave licenses in the 39 GHz and 133 licenses in the 28 GHz. The all-stock merger should close within 12 months, subject to Federal Communications Commission (FCC) review. That transaction gives Verizon access to millimeter wave spectrum. The next-generation technology is expected to bring an ultra-fast connection, but it requires far higher frequency spectrum than what current wireless technology uses. T-Mobile controls 97.4 billion and Straight Path has 39.7 billion, according to a Bloomberg Intelligence analysis. The carrier has also laid out its broader "5G Evolution" plans, going head to head with Verizon in its goals.

Under the settlement, Straight Path will pay two civil penalties and surrender about 20% of its 5G licenses to the FCC. In addition, Kerrisdale valued the company at about $200 million, less than half of the company's value before the acquisition.

Straight Path's airwaves were originally purchased in 2001 from Winstar Communications Inc., a wireless service provider that went bust at the tail end of the internet and telecommunications bubble.

The deal with AT&T is supported by Straight Path's majority shareholder, Howard Jonas, who has entered into a voting agreement with the carrier in support of the transaction. That's far above the stock's Friday closing price of $36.48.

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