AT&T announced plans Monday to purchase Straight Path Communications (SPC), one of the nation’s largest holders of “millimeter wave” spectrum in the 28 GHz and 39 GHz bands, as part of a $1.6 billion transaction that represents AT&T’s second major acquisition of fifth-generation (5G) wireless spectrum assets since January.
Monday’s deal follows on AT&T’s previously-announced plans to acquire FiberTower, a key provider of backhaul services to wireless carriers through its stable of millimeter wave licenses in the 24 MHz and 39 GHz bands. The FiberTower agreement, which remains subject to regulatory approval, was signed in January, and the Straight Path deal would provide AT&T with additional millimeter wave licenses representing nearly 95% of the commercially-available 39 GHz spectrum capacity nationwide plus an average millimeter wave spectrum allotment of 620 MHz in the top 30 U.S. markets. Observers believe the FiberTower and SPC transactions will prove instrumental in boosting AT&T’s long term 5G network ambitions and its short term goal of testing the usage of 5G frequencies in support of fixed and mobile wireless video services. Earlier this year, AT&T completed technology trials with Nokia that involved the streaming of DirecTV Now content via fixed wireless 5G connections in the 39 GHz band, and the carrier has confirmed plans to conduct additional fixed and mobile 5G trials later this year in both the 28 GHz and 39 GHz bands.
For SPC, the agreement responds to the conditions of a consent decree that the company signed with the FCC in January to settle allegations that SPC had obtained FCC consent to the renewal of 39 GHz band licenses by submitting showings of “substantial service” for systems that were never built. To avoid incurring the FCC’s maximum recommended penalty of $100 million, SPC agreed to surrender a portion of its 39 GHz license portfolio to the FCC and to divest remaining 28 GHz and 39 GHz licenses in that portfolio within a year. (SPC still must pay the FCC $15 million in penalties over the next nine months.) The company will also have to remit 20% of its proceeds from the sale of the licenses to the U.S. Treasury.
Under the terms of Monday’s deal, SPC shareholders will receive shares of AT&T stock valued at $1.25 billion, or $95.63 per share, which represents a 204% premium over SPC’s closing stock price on January 11 (i.e., the day before the consent decree was disclosed.) AT&T will also remit payments that are due to the FCC under the consent decree and assume other liabilities incurred by SPC. Contingent upon receipt of FCC and other regulatory approvals, the parties hope to complete the transaction within a year.