May 12, 2017 06:01 AM EDT
An unusually intense bidding war for Straight Path, a spectrum-holding company, gave Verizon a head start in the race for 5G wireless networks among wireless carriers. Verizon’s bid of $3.1 billion beat the $1.6 billion offer made by rival AT&T on April 10.
Straight Path’s portfolio of millimeter-wave spectrum across the U.S. includes 735 licenses in the 39GHz band and 133 licenses in the 28GHz band. The spectrum is expected to support the development of 5G wireless networks. AT&T then said it was expected to win the bid, but rumors of Verizon offering a higher bid surfaced, Ars Technica reports.
On Thursday, Verizon announced it won the bid for Straight Path which would give the company advantage in the 5G wireless network race over its competitors. Verizon says pending the Federal Communication Commission’s review, it expects to close the purchase within nine months. In a statement, it said, “Verizon now has all of the pieces in place to quickly accelerate the deployment of 5G.”
Straight Path sold its wireless spectrum after it was penalized in 2017 by regulators for its failure to build working 5G wireless networks more than 15 years after it acquired most of its wireless spectrum. According to Engadget, Verizon would buy Straight Path for $184 per share. It is a 17.8 percent discount at the close of Straight Path’s share price on Wednesday.
Straight Path has AT&T’s bid to thank for the almost five-fold rise in share prices since April 7, one day before AT&T announced its $1.6 billion bid, or $95.63 per share, New York Post reports. In contrast, the winning $3.1-billion bid of Verizon, which gains a head start in the 5G wireless networks’ race, disappointed some shareholders, causing a 20 percent drop in shares of Straight Path to $178 on Thursday in premarket trading.
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