Verizon Communications may already be the No 1 wireless carrier in the United States, but that is not stopping them from continuing their growth; after all, what good is being at the top if you can’t stay there?
With that in mind, then, Verizon has just announced its plans to buy the wireless spectrum holder Straight Path Communications at an enterprise value of more than $3 billion. More importantly, the purchase puts to bed a bidding war with mobile/digital tech rival AT&T.
Straight Path holds a massive collection of 28 GHz and 39 GHz millimeter wave spectrum—the kind used in mobile communications. By purchasing their inventory, essentially, Verizon has managed to secure a significant advantage in the development of fifth generation (5G) networks. Obviously, it is widely expected that 5G networks will deliver faster downloads and deliver a boost of web-reliant products, a type of thing that will be more necessary in products like self-driving cars (more than, say, your mobile phone).
In regards to the deal, the company said, today: “The Straight Path board of directors determined, in good faith, after consultation with its financial advisors and outside legal advisors, that the transaction with Verizon constituted a Superior Proposal under the AT&T Merger Agreement. AT&T informed Straight Path that after much deliberation, it has determined not to make any new bids or proposals to Straight Path or to propose any amendments to the AT&T Merger Agreement.”
As such, Verizon and Straight Path both agree that they expect the closing of this deal should finalize within the next nine months; of course, it is subject to FCC review.
On news of the merger, AT&T shares seem to fall notably lower at $38.20 in premarket trading, to no surprise, as Verizon shares saw little change from the $46.38 closing price of the day prior, to slightly more surprise.