Verizon may challenge AT&T's $1.6B bid for Straight Path: report

Verizon may challenge AT&T’s aggressive bid for Straight Path Communications.

AT&T earlier this week announced plans to acquire Straight Path Communications in an all-stock deal aimed at bulking up the carrier’s portfolio of millimeter-wave spectrum. Straight Path shareholders are set to receive $1.25 billion, or $95.63 per share, to be paid in AT&T stock, in a deal that would mark a premium of more than 200% over the previous value of Straight Path’s shares.

But Reuters reported this week that Verizon is considering topping AT&T’s offer. Straight Path said in a regulatory filing that a third party was mulling a deal, though it didn’t disclose the name of that company.

A Bloomberg report echoed Reuters’ story, saying that Straight Path and Evercore, an adviser, had received a letter from the unidentified company.

Straight Path earlier this year reached a $100 million settlement with the FCC, ending an investigation into the company’s failure to deploy wireless services as required under FCC spectrum licensing rules.

Straight Path agreed to pay two civil penalties and surrender about 20% of its 5G licenses to the FCC. For the $100 million civil penalty, Straight Path will pay $15 million upfront with $85 million suspended unless Straight Path sells all its remaining licenses or surrenders them to the FCC within 12 months. Also, 20% of any sale proceeds must be paid to the Treasury as an additional civil penalty.

Post-settlement, Straight Path holds an average of 620 MHz in the top 30 U.S. markets and covers the entire nation with 39 GHz spectrum, and it has retained all its 28 GHz spectrum licenses. Straight Path had long been expected to sell its licenses to a wireless or cable network operator.

The potential bidding war underscores the ever-increasing value of millimeter-wave spectrum as mobile network operators plot their strategies in advance of the launch of 5G offerings. Although higher-band airwaves have historically proved difficult to use to provide wireless services, they do promise to allow carriers to provide much higher speeds and far greater capacity, albeit in smaller coverage areas.

Indeed, high-band airwaves appear to be much more highly prized than low-band spectrum, particularly among the nation’s two largest carriers. AT&T committed to spend only $910 million in the FCC’s incentive auction of 600 MHz spectrum, for instance, and Verizon opted to spend nothing despite qualifying for the event.

AT&T has moved aggressively to shore up its spectrum assets in recent months, and will get access to additional low-band spectrum after winning the right to build the first U.S. network dedicated to first responders. Verizon added a significant chunk of millimeter-wave spectrum last year through a transaction with XO Communications. And now both operators may have Straight Path in their sights.