Verizon ups bidding war for Straight Path with $1.6bn offer
09 May 2017 | James Pearce
An unnamed US telco, believed to be Verizon, has made an offer almost double the amount bid by AT&T to buy spectrum holder Straight Path.
Straight Path, which specialises in millimetre wave (mmW) communications, had already received a bid of $1.6 billion from AT&T, but according to US report, Verizon has almost doubled the amount on offer.
Straight Path was spun out of IDT in 2013 and holds a large amount of 28GHz and 39GHz spectrum, which has been earmarked as key bands for use in 5G technology, set to launch in 2020.
Both Verizon and AT&T are looking to position themselves as leaders in 5G, with the latter last week announcing its “Road to 5G” offer, which was met with derision by rivals including T-Mobile.
Straight Path didn’t disclose the name of the second bidder, but CNBC cited a source close to the process who claimed it is Verizon. A separate report from Reuters also made the same claim, although Verizon declined to comment.
Verizon’s all-stock offer of $184 per share represents a value of around $3.1 billion, with an equity value of around $2.3 billion, according to Reuters. This significantly trumps AT&T’s offer of $95.63 per share.
The bidding war has seen Straight Path’s share price skyrocket by a third to $52.01 per share. The latest bid means AT&T has just three business days to come up with a counter offer.
Straight Path has not been without controversy. The company was earlier this year hit with a $100 million Federal Communications Commission (FCC) fine for failing to deploy wireless services. It is also set to be forced to surrender 20% of its spectrum licenses under the January ruling.
Verizon’s increased bid came on the same day that its CEO Lowell McAdam told analysts that he feels no “urgency” to make a content or spectrum deal.
McAdam had previously told Bloomberg he would be open to discussions with Comcast, Disney or CBS about potential deals, but told analysts on the 8 May call he would prefer the US telco to grow organically.
He said: “The question was, ‘Well, if you got a phone call from somebody, would you talk to them?’ You know, I like to consider myself a polite and hospitable person. That doesn’t change anything that’s gone on in the past five years. If somebody calls, you have a nice chat with them.”
“But the bottom line is: We don’t feel the urgency that seems to be out there in the analyst community, the banking community, and the media.”
3h | Natalie Bannerman
3h | Jason McGee-Abe
3h | Jason McGee-Abe