AT&T Acquires Straight Path For $1.6 Billion, Paves Way For 5G
The battle for 5G supremacy rages on and A&T has just fired its second major salvo of the year.
AT&T has announced the acquisition of Straight Path Communications, a company that holds 5G technology frequencies. The company recently acquired FiberTower last January for the same business reason. AT&T's purchase came at a right time when rumors of rival Verizon's plan to buy Comcast continue to swirl.
AT&T On Straight Path To 5G
AT&T announced the acquisition through its official press release. Straight Path Communications possesses one of the largest portfolios of millimeter wave (mmWave) spectrum bands. AT&T will get Straight Path's 735 mmWave licenses in the 39 GHz frequency band, and 133 licenses in the 28 GHz band.
These licenses cover the United States, including 40 big markets. The Federal Communications Commission has recently approved these frequencies to power the next-generation wireless service, 5G.
The deal reached a total value of $1.6 billion. The transaction includes liabilities and remittances to the FCC. The shareholders of Straight Path will get $1.25 billion, which translates to $95.63 per share payable by AT&T stock.
According to AT&T, the Straight Path purchase complements the company's acquisition of FiberTower, another company that carries 5G-ready frequencies of 24 GHz and 39 GHz.
"The acquisition will support AT&T's leadership in 5G, which will accelerate the delivery of new experiences for consumers and businesses like virtual and augmented reality, telemedicine, autonomous cars, smart cities, and more," says AT&T.
What Is 5G?
5G, or 5th Generation, is the next generation for mobile technology. There is no general definition yet for this tech, but one of most common cited features is the use of mmWave frequencies, which according to mobile networks can unlock the secret to super-fast internet speeds. AT&T states that the International Telecommunications Union has pegged 5G speeds at 10 Gbps (gigabits per second) upstream and up to 20 Gbps downstream.
This is why the acquisition of FiberTower and Straight Path is crucial to AT&T's plans. Their frequencies will play a central role in AT&T's domination of the 5G market. Although the technology is still in development, Ericsson places the market value of 5G at $1.2 trillion by 2026.
In October 2016, AT&T teamed up with Ericsson to demonstrate 5G and the use of mmWave technology. And in February 2017, AT&T and Nokia delivered DirecTV Now over a 5G connection via 39 GHz mmWave.
The AT&T-Straight Path deal will undergo FCC review. The two companies expect to finalize the deal within 12 months.