Friday, 24 November, 2017

Verizon wins bidding war with AT&T for Straight Path

Verizon wins bidding war with AT&T for Straight Path Verizon wins bidding war with AT&T for Straight Path
Nellie Chapman | 24 May, 2017, 00:58

AT&T announced last month that it had agreed to buy Straight Path for $1.6 billion, but after Verizon placed a bid for almost double that amount on Monday, AT&T declined to match it, reports the Wall Street Journal.

"AT&T informed Straight Path that after much deliberation, it has determined not to make any new bids or proposals to Straight Path or to propose any amendments to the AT&T Merger Agreement".

The $184 per share all-stock offer represents a discount of 17.8 percent to Straight Path's close on Wednesday. Straight Path's 735 licenses in the 39GHz band and 133 licenses in the 28GHz band "cover the entire United States, including all of the top 40 markets", AT&T said last month.

According to people familiar with the matter, Verizon has outbid AT&T by $1.5 million to buy Straight Path, a company that owns high-frequency radio waves.

The all-stock deal was announced Thursday, one month after AT&T said that it would buy Straight Path for $1.6 billion. Today's announcement revealed Verizon was that mystery bidder.

Big Picture: Verizon is spending $3.1 billion to help solidify its future plans in 5G wireless.

The wireless spectrum will give Verizon an advantage when building out 5G networks, solution providers say. The transaction is supported by Straight Path's majority shareholder, Howard Jonas, who has entered into a voting agreement with Verizon and agreed to vote his Class A shares (held through a trust) in support of the transaction, subject to certain limitations.

Iain Gillott, founder of iGR, said the Straight Path deal further strengthened Verizon's notion that it did not need any more traditional cellular spectrum, which was highlighted by the carrier emerging empty handed from the FCC's recent 600 MHz incentive auction proceedings. Worldwide 5G standards are being finalized this year, and carriers are starting to promise 5G networks, but the transition from 4G to 5G will take a few years. Verizon does not expect the CMCSA/CHTR announcement to significantly impact its MVNO relationship with either company.

5G needs spectrum in three frequencies. This was not a surprise to Gillott.

"Getting fiber into a home or apartment can be very hard for carriers", Madden said.

Post-settlement, Straight Path holds an average of 620 MHz in the top 30 US markets and covers the entire nation with 39 GHz spectrum. Hengehold Capital Management LLC acquired a new stake in Verizon Communications during the third quarter worth about $230,000. "Using our fixed wireless capacity is more energy efficient, as the data flows seamlessly through the air for miles, instead of being channelled through cables that need to be lit constantly".

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. (VZ) has a trading volume of 12.67 Million shares, with an average trading volume of 16450 shares - with shares dropping to a 52 week low of $44.99, and the company's shares hitting a 52 week high of $ 54.51.