Comparison of StraightPath and Fibertower:
*Straightpath has small 28 ghz holdings and has 735 39 ghz licenses. (They had 931 Licenses, Forfeited 193 Licenses in Top 40 Markets where they had more than 600/700 Mhz)
*On the hook for $15M and then another $85M which can be suspended if the sale of the company/licenses goes through in next 12 months and then must remit 20% of sale to FCC/Treasury.
*Straightpath Current Market Cap as of Friday Close after the announcement on Thursday and Conference Call on Friday is $490M
*$490M Market Cap incorporates the $15M Fine and the $85M Fine or the 20% of asset sale. That implies an overall value to the current company of ~$590 - $600M before the fines/potential treasury payment.
*Do a comparable to Fibertower. This includes all licenses including those in litigation.
179 24 ghz licenses
635 39 ghz licenses
*When you compare Straightpath’s 28ghz holdings to Fibertower's 24 ghz holdings it is safe to say the 24 ghz of Fibertower probably has greater value due to the extent of the nationwide holdings. In the 39 ghz band Fibertower has 635 Licenses to StraightPath's 735 Licenses. So let's say we are in the ballpark of an apples to apples valuation of ~$600M.
*Market Value $600M
Fibertower Bond Holders $175M
Unsecured Creditors $50M
Misc $25M
Balance of $350M or $7.29 per share for the common…ballpark estimate.
*I think the key here is that the FCC was willing to make a deal so quickly with StraightPath and wants that spectrum out in the marketplace and put to use. If you compare the actions of StraightPath and Fibertower, hands down Straightpath was a spectrum squatter and very brazen for many years.
Fibertower went out and built a viable backhaul business, developed products to utilize their spectrum(Spectrum in a Box), worked hand and hand with the FCC, and was assured by someone at the FCC that they would gain a extension/waiver of buildout requirements based on all their work until it was pulled out from under them at the last minute.
*Compare that to Straightpath who can't tell anyone if they had functioning equipment at sites or not when they filed their renewals. After their investigation they basically claimed ignorance and that they had no idea. With Straightpath where were the Checks and Balances, Paperwork, Systems etc…there should have been something in place.
*It appeared like ignorance that bordered on defrauding the FCC and they essentially still get to retain 80% of their holdings because the FCC wants the spectrum out in the marketplace.
*Fibertower's potential court case won't get going until 2019 which means no one can touch the spectrum until then.
I sense a similar deal coming for Fibertower and possibly a better one provided the new administration, new commissioner who will possibly be PAI who is largely pro-business and free market.
*It is like night and day the contributions and efforts of Straightpath vs. Fibertower and Straightpath is coming out of this smelling like a rose. Should bode well for Fibertower.
