A published report citing a Straight Path regulatory filing suggests Verizon is set to top AT&T’s pending acquisition offer for the spectrum-rich company.
Verizon Communications is reportedly eyeing a competing bid for millimeter wave spectrum holder Straight Path, which has already approved a $1.6 billion acquisition by AT&T.
Published reports indicated Verizon was looking at making an offer for Straight Path that would top the current bid by AT&T. That bid, which was announced earlier this month and approved by the board of directors at both companies, includes $1.25 billion in stock and the assumption of Straight Path liabilities.
The Reuters report cited a Straight Path regulatory filing that indicated the company was evaluating an offer from an unnamed third party that had reached out to the company prior to the AT&T bid. Verizon reportedly refused to comment to Reuters on the news.
As part of its deal with AT&T, Straight Path did include language allowing its board to change its recommendation should a superior offer be made, though the company would be forced to pay AT&T a termination fee of up to $38 million. The deal, which in its current form is set to close within one year, also calls for AT&T to make an $85 million payment to Straight Path should the current agreement remain in place but no close by July 9, 2018.
Straight Path currently holds the rights to 868 spectrum licenses in the 28 GHz and 39 GHz spectrum bands covering most of the United States, including spectrum in the country’s 40 largest markets. Both spectrum bands are also included in the Federal Communications Commission’s Spectrum Frontiers proceedings, which has the federal government looking to open up nearly 11 gigahertz of spectrum above the 24 GHz band in support of mobile telecom services.
Straight Path earlier this year agreed to a settlement with the FCC over spectrum license build out requirements. As part of the settlement, Straight Path agreed to pay a $100 million civil penalty to the United States Treasury, surrender 196 of its spectrum licenses in the 39 GHz band, and sell the remainder of its license portfolio, with 20% of those proceeds also paid to the Treasury as “an additional civil penalty.”
The settlement stemmed from an FCC Enforcement Bureau investigation that began with an anonymous source publishing allegations that Straight Path falsified build out claims in obtaining renewal of its 39 GHz spectrum licenses. The FCC said it found equipment in support of the spectrum had only been deployed for a “short period of time at the original transmitter locations and that no equipment was present at the time of this investigation at the majority of the relevant locations.”
AT&T and Verizon would be looking to tap Straight Path’s spectrum resources for ongoing work related to “5G” technology trials and deployments.
AT&T in February announced plans to launch its first “5G Evolution markets” in the coming months in Indianapolis and Austin, Texas. The test beds are said to include dedicated outdoor and indoor testing locations that will include “flexible infrastructure to allow modifications and updates as 5G standards develop,” and include spectrum support below 6 GHz, and in the 28 GHZ and 39 GHz bands.
AT&T in February also noted a recent trial with infrastructure partner Nokia in streaming DirecTV content using millimeter wave spectrum in the 39 GHz band and fixed wireless equipment at the AT&T Labs facility in Middletown, New Jersey.
The carrier earlier this year announced plans to acquire FiberTower, which holds spectrum licenses in the 24 GHz and 39 GHz bands and provides wireless services to carriers, enterprises and government entities. Carriers typically use FiberTower’s services for wireless backhaul.
Verizon is set this month to begin fixed wireless 5G trials across a handful of U.S. cities using spectrum in the 28 GHz band. The carrier said plans include trials in 11 markets by mid-year, including portions of Ann Arbor, Michigan; Atlanta; Bernardsville, New Jersey; Brockton, Massachusetts; Dallas; Denver; Houston; Miami; Sacramento, California; Seattle; and Washington, D.C. The trials are set to focus on providing wireless internet access and voice over IP calling.
Verizon recently walked away empty handed from the FCC’s 600 MHz incentive auction proceedings, which when linked with the Straight Path rumor could signal the carrier is focusing its future spectrum acquisition efforts on higher-band airwaves.
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