“In business, there are two kinds of people – the quick and the dead.”
How many times have we heard that old adage?
Just because it’s a cliché doesn’t mean it’s not true – in fact – one could argue it’s a cliché because it IS true…
And obviously, this is something at the forefront of the minds of the higher ups at AT&T (T) – as they’ve just made a move that could make them the “quickest” in their industry.
Now, bad pun aside – what AT&T has just done may make them the first of the big carriers to offer 5G wireless service…
And let’s hope their gamble pays off – as it’s just cost them a whopping $1.6 Billion to pull off.
Just what did they do?
Well, it was announced Monday, April 10th, that AT&T has agreed to buy Straight Path Communications Inc. (STRP) in an all-stock deal.
According to Bloomberg.com, “AT&T will acquire Straight Path for $95.63 a share in an all-stock merger designed to be a tax-free reorganization, according to a statement Monday. That’s a 204 percent premium to Straight Path’s closing price of $31.41 on Jan. 11, the day before the company entered into a settlement with the FCC, and a 162 percent premium to its closing price of $36.48 on Friday.”
The best part? The FCC has already approved the company for 5G (or fifth generation) use – which could be putting AT&T directly into the drivers seat of their industry.
Straight Path, one of the largest holders of 5G frequencies in the US, has run afoul of the FCC recently for “misrepresenting their progress on the 5G spectrum”, so the purchase couldn’t have come at a better time for them, as they could be staring at a $100 Million in fines and purchase rights.
Lucky for Straight Path, the total value of the AT&T deal includes liabilities and amounts owed to the FCC according to Straight Path’s settlement.
Shareholders in AT&T know that this acquisition is the second one of it’s kind for the company this year, as in January, AT&T purchased FiberTower Corp., another licensee of FCC approved 5G airwaves.
Add these two licenses together – and AT&T becomes the largest provider of 5G service in the country.
Why is this so important?
Faster connections and greater download capacity will help AT&T compete with internet providers and help their customers stream Netflix (NFLX) or live TV to their wireless devices.
And for AT&T – this acquisition couldn’t have come at a better time as it’s estimated that other carriers and hardware makers could soon be spending $200 Billion a year on 5G technology.
That’s a lot of cheddar…
Another reason is the fact that I’m sure AT&T is tired of being #2 in their industry.
Being the “big dog” in 5G gives them an edge over their direct competition – and may draw some former customers back from the #1 carrier, Verizon (V).
So is it safe to assume we can expect some big things out of AT&T stock in the next few months and years to come?
In the shorter term, I’m not sure – but I would say that the moves they’re making this year bode well for shareholders in the long run.
Only time will tell…
There are OTHER companies out there that could very well become the “quickest” in their industry. And as soon as I lock one down using my risk-adverse GorillaTrades system, I’ll let my subscribers know ASAP!
I’d love for you to be at be able to profit with them when I do…
That’s why I’m asking you to consider joining GorillaTrades BEFORE my next pick goes out – it could become a top performer in your portfolio!
Hopefully, this information will help you in deciding whether or not to add AT&T to your portfolio or not – either way, I hope you have enjoyed my ramblings.
Until next time…
“Your premium brand had better be delivering something special, or it’s not going to get the business.” – Warren Buffett