ReutersAT&T Inc. said on Monday it would buy Straight Path Communications Inc., a holder of licenses to wireless spectrum, for $1.25 billion in an all-stock deal as it aims to accumulate the airwaves it needs for a next-generation network.
The deal shows how wireless carriers may be increasingly willing to pay lofty prices for assets they view as critical to 5G, which is expected to boast higher speeds and more capacity.
The network is widely considered to be a multibillion dollar opportunity, and wireless carriers do not have many acquisition targets that would give them the type of spectrum they need in preparation for the rollout. Straight Path is one of the largest holders of 28 GHz and 39 GHz millimeter wave spectrum used in mobile communications.
The No. 2 U.S. wireless carrier said it would offer $95.63 per share, a premium of 162.1 percent over Straight Path’s close on Friday. Straight Path’s shares rose to $91.32 in afternoon trade, while AT&T’s shares were marginally lower.
Millimeter wave spectrum is expected to play a large role in 5G networks. Both AT&T and rival Verizon Communications Inc. have been conducting 5G trials. Verizon is testing a 5G fixed wireless service with equipment maker Ericsson in 11 markets in the U.S. and expects a commercial launch as early as 2018. Meanwhile, AT&T said earlier this year that it had successfully completed tests with Nokia that delivered its streaming video service DirecTV Now over a 5G connection using millimeter wave technology.Speech