DALLAS _ AT&T is racing to build a 5G network with faster speeds and reliability to support video streaming, virtual and augmented reality, connected home, car, and health devices, and self-driving cars.
The Dallas-based telecom giant says it's getting a step closer by acquiring Straight Path Communications. The Virginia company owns a large nationwide portfolio of spectrum, or airwave licenses. The acquisition, announced early Monday, has a total value of $1.6 billion. That total includes the liabilities and amounts that Straight Path must pay the FCC from a previous settlement.
Straight Path shareholders will receive $1.25 billion, or $95.63 per share, paid in AT&T stock, according to an AT&T news release.
The Federal Communications Commission will review the acquisition. AT&T said in a news release that it expects the deal to close within 12 months.
AT&T officials said in a news release that Straight Path's spectrum portfolio will complement the spectrum licenses that it got in January through the acquisition of FiberTower.
Straight Path had an incentive to seek out buyers after a settlement with the FCC, said Matthew Kanterman, a tech and telecom analyst with Bloomberg Intelligence. The FCC penalized the company for not meeting infrastructure build-out requirements for its spectrum licenses. It faced a $100 million fine _ or a lesser fine of $15 million plus 20 percent from sales of its licenses, if the company was sold.
The company's spectrum portfolio appealed to AT&T, as the company looks to a 5G future. Straight Path owns large amounts of 39 gigahertz and 28 gigahertz licenses, the two primary high-frequency bands of spectrum planned for use in the 5G rollout in the U.S.
AT&T got some of those licenses with FiberTower, but will get a much larger swath with the Straight Path acquisition. "This is their (AT&T's) land grab," Kanterman said. "This is them staking their claim to a position in the market."
With the Straight Path deal, he said AT&T is "future-proofing their spectrum portfolio for the eventual rise of 5G."
Wireless carrier rival Verizon made its own 5G land grab. It recently finalized its $1.8 billion acquisition of XO Communications, a deal that included 28 gigahertz and 39 gigahertz licenses.
AT&T has testing 5G technology. Last fall, AT&T and Ericsson worked together in demonstrations. In February, AT&T and Nokia delivered AT&T's live video streaming service, DirecTV Now, over a fixed wireless 5G connection during a 5G test.
AT&T is in the middle of a $108.7 billion merger with Time Warner. The New York media and entertainment company owns a treasure trove of content and networks, including HBO, Turner's channels of TNT, TBS and CNN, and Warner Bros. Entertainment.
