Verizon Seen Making Rival Bid for Straight Path in Early 5G War
Verizon is likely the mystery bidder that made a rival bid for Straight Path, a company AT&T planned to buy to increase its portfolio of high-frequency spectrum for 5G (see 1704100037), industry officials said. Verizon isn’t commenting. Verizon appears to be maneuvering to maintain its advantage over AT&T in the new 5G bands, analysts said.
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AT&T also is buying FiberTower, a company with 24 and 39 GHz holdings. But Verizon jumped out to an early lead by buying XO, which had extensive high-frequency assets (see 1702010035). In July, the FCC approved the use of various millimeter-wave bands for 5G (see 1607140052). Carriers have said repeatedly they need low-, mid- and high-band spectrum for 5G.
“Spectrum remains a scarce resource,” said Roger Entner, analyst at Recon Analytics. “This is an obvious and fully rational spectrum land grab.”
"It looks like we have a bidding war on our hands, with the two most forward-looking carriers vying for the most useful spectrum in the 5G era, the long-neglected high band," said Richard Bennett, network architect. "Everything we’ve heard about low band being the 'beachfront spectrum' was wrong."
But Craig Moffett, analyst at MoffettNathanson, said he has no idea whether Verizon is the rival bidder. The FCC already plans to eventually hold auctions of high-frequency spectrum allocated for 5G last July, he noted. “It's hard to see the bidding war for Straight Path as anything other than a timing hedge against a delayed millimeter wave auction from the FCC,” Moffett said. “There will ultimately be a ton of this spectrum coming to market. But after a disappointing incentive auction, there is a real chance that the FCC decides to wait a while before moving forward with what would be another big bite for the wireless operators' stretched balance sheets.”
Straight Path said in a news release Tuesday a “multi-national telecommunications company” had made a rival bid of $1.8 billion for the company, topping AT&T’s offer of $1.6 billion. AT&T executives said Tuesday they're still weighing their options (see 1704250067).
Straight Path acknowledged it would have to pay AT&T a $38 million termination fee if the Straight Path Board terminates the AT&T merger agreement. “At this time, Straight Path remains subject to the AT&T Merger Agreement and the Straight Path Board has not changed its recommendation in support of the AT&T transaction, the existing AT&T Merger Agreement, or its recommendation that Straight Path's stockholders adopt the AT&T Merger Agreement,” Straight Path said. “There can be no assurances that a transaction with the Bidder will result from the Bidder's offer, or that any other transaction will be consummated.”