This should put a huge bullseye on Fibertower and their Bankruptcy. This puts Fibertower's holdings well north of $1B+ or $20+ per original common share less the debt. You would have thought ATT and Fibertower would have ponied up and bought off the shareholders to move forward.
Straight Path Talking Points FINAL – April 10, 2017
Q: Why are you acquiring Straight Path? A: The acquisition will support AT&T's leadership in 5G, which will accelerate the delivery of new experiences for consumers and businesses like virtual and augmented reality, telemedicine, autonomous cars, smart cities and more. It complements our January acquisition of FiberTower and augments our holdings of mmWave spectrum.
Q: In what band is the mmWave spectrum you're acquiring? A: Straight Path holds spectrum rights in the 39 and 28 GHz bands. In the 39 GHz band, this includes spectrum in the 40 largest markets across the United States, including New York City, Los Angeles, San Francisco, Washington, DC and Atlanta
Q: What about the licenses that Straight Path had to surrender to the FCC when it entered a consent decree earlier this year? A: The acquisition excludes the 196 licenses that Straight Path surrendered to the FCC per the terms of its January 2017 consent decree. Those licenses are now held by the FCC.
Q: Do you expect the FCC to auction the former Straight Path mmWave licenses? A: I can't speculate as to what the FCC might do.
Q: How much are you paying for Straight Path? A: The transaction has a total value of $1.6 billion which includes liabilities and amounts to be remitted to the FCC per the terms of Straight Path's January 2017 consent decree. Straight Path shareholders will receive $1.25 billion, or $95.63 per share, which will be paid using AT&T stock.
Q: Why won't all the funds go to Straight Path shareholders? A: In January, Straight Path entered into a consent decree with the FCC. Under the terms of the consent decree, Straight Path agreed to pay up to $100 million to the FCC unless it disposed of all its remaining licenses within 12 months. And it also agreed to pay 20% of the proceeds from the sale of the licenses, regardless of when such a sale occurs. As a result, 20% of the price we're paying for the acquisition will go to the FCC.
Q: Are you overpaying in order to meet the consent decree requirements? A: We believe we're paying a fair price for the spectrum that we're acquiring. The FCC penalty is being borne by Straight Path shareholders via the 20% of the purchase price that will go to the FCC.
Q: Why wouldn't Straight Path pay the penalty to the FCC? A: Straight Path is paying the penalty. The company and its shareholders are forfeiting 20% of the purchase price via the payment to the FCC, and this allows AT&T to ensure the payment gets made.
Q: Your release mentions the acquisition price includes liabilities in addition to the 20% to go to the FCC. How much are those liabilities? A: We're not providing that level of detail, but it's small relative to the total transaction value.
Q: Why are you making this purchase in stock versus cash? Won't that be dilutive? A: Payment in stock was what we negotiated with Straight Path. And it's good for Straight Path owners who will have an opportunity to defer taxes and will get shares of a stock with a strong dividend. Due to the size of this transaction any dilutive impact will be small.
Q: Will you keep Straight Path's employees? A: This acquisition is primarily about securing additional mmWave spectrum to support our rollout of 5G in the coming years.
Q: Why are you acquiring the 28 GHz A2, A3 and B bands? Isn't the value of those bands low given they weren't part of the FCC's Spectrum Frontiers Report and Order? A: The purchase price is primarily driven by the value of the 39 GHz and 28 GHz A1 spectrum. We'll look into putting the remaining 28 GHz spectrum into service if the FCC eventually permits flexible use in that band.
Q: With your acquisitions of mmWave spectrum from both Straight Path and FiberTower, are you concerned the FCC may require you to divest some licenses? A: I can't speculate about what the FCC might do.
Q: Are you interested in acquiring additional mmWave spectrum? A: I can't comment on specific plans; however, this transaction gives us enough spectrum at this time to pursue our 5G strategy.
Q: What's your timeline to deploy this spectrum? A: We don't have a timeline to share, but we expect it will be tied to our deployment of 5G.
Q: Do AT&T shareholders need to vote on the transaction? A: No AT&T shareholder vote is required.
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