The bidding war for Straight Path Communications may not be over yet. Rumors now suggest that Verizon is considering an offer for the spectrum owner that would take the prize away from rival AT&T.
A recent agreement between the FCC and Straight Path cleared the way for an auction, one that both AT&T and Verizon had been bidding in. Then earlier this week, AT&T announced a $1.6B deal for Straight Path, which has a pile of millimeter wave spectrum in the 28Ghz and 39Ghz ranges. Some $1.25B of that would go to Straight Path shareholders in the form of AT&T stock with the balance of the value being sent back to the FCC.
For a long time Millimeter-wave/LMDS spectrum was very much unloved, but plans for 5G technologies now promise to put it to use as cell networks become more densely packed and data throughput requirements continue to rise. Verizon already has access to a pile of such spectrum if it wants it from the XO deal, which included options to acquire of it by the end of next year. Why then would they want to outbid AT&T for Straight Path?
It's hard to tell. Perhaps they foresee needing more licenses covering more geographies etc. Or perhaps it's cheaper/easier this way than whatever terms they got from Carl Icahn on those options in the XO deal. Or possibly they want to keep it out of AT&T's hands. I suspect it's the first option, as I don't really believe there's a shortage of spectrum in these ranges just yet. However, Verizon hasn't come up with a bid yet, so it could all just be smoke.
Investors seem to be taking the possibility of a bidding war seriously, as in after-hours trading Straight Path's stock rose another 9.4%, now trading $4 higher than the AT&T purchase price.