AT&T Agrees to Buy Straight Path for $1.3 Billion For Supporting 5G Rollout

By Pritpal Singh | Apr 12, 2017 06:18 PM EDT
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AT&T is the second-largest U.S. carrier and is planning to take the lead in 5G rollout and become the leader for the technology. The company recently announced its plans of acquiring Straight Path that would help the company to build a 5G network.

Straight Path has a nationwide portfolio of millimeter wave spectrum that can help AT&T to roll out a 5G network. The license obtained by this deal will let AT&T cover whole of the United States including all the top 40 markets.  Straight Path has a license of 39GHz and 28GHz frequencies, as reported by ZDNet.

The deal between AT&T and Straight Path is valued at $1.6 Billion which includes liabilities and scheduled remittances to the Federal Communications Commissions (FCC). The deal is expected to close within six months and Straight Path shareholders will receive $1.25 billion from the AT&T stocks. This pay stock is equal to $95.63 per Straight Path share.

The millimetre-wave spectrum is crucial for the deployment of 5G services. Since this spectrum can carry higher frequencies, it can carry large amounts of data over the shorter distance. AT&T could leverage its existing wireline broadband network but that would require the company to extend its wireless footprint to fully make use of the high-band spectrum assets, Forbes reported.

5G technology will succeed the 4G technology that is being used widely globally. The new standard will provide up to 40 times more speed than the current generation networks. Major U.S carriers have been making plans to deploy the technology and carrying out trials. Earlier this year,  AT&T also announced that it is planning to conduct multiple 5G trials using its higher band frequencies.

The acquisition of Straight Path would mean a fresh start for AT&T for its 5G rollout. AT&T might get ahead of its rival Verizon as It will have more 5G spectrum available after the acquisition. 5G data networks are capable of providing link rates of 20Gbps for download and 10Gbps for upload respectively.

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