To scale and accelerate deployment of next-generation broadband services throughout the United States, Verizon Communications Inc. (NYSE: VZ – $45.99) announced it has signed an agreement to acquire Straight Path Communications Inc. Verizon, which outbid AT&T for the company, will purchase Straight Path for $184.00 per share, or a total consideration of $3.1 billion, in an all-stock transaction, which is expected to close within nine months, subject to FCC review. Based in Glen Allen, Va., Straight Path holds millimeter wave spectrum configured for 5G services, including 39 GHz licenses that serve the entire country and 28 GHz assets in major markets. Verizon will boost its deployment of 5G network technology, which it is starting to try in 11 cities. The super-high frequency spectrum used to be considered useless for wireless, but technological developments have made it highly valuable. The way to think about the spectrum is that it’s basically a wireless extension of fiber-optic cables. Verizon’s other moves have been to acquire and build more fiber-optic wires around cities, and the new spectrum will mesh nicely with those assets.
High-quality Verizon stock remains a solid choice for conservative investors. At the recent quotation, the equity’s 3- to 5-year appreciation potential is above average based on its current valuation of 12 times estimated 2017 full-year earnings. And the total return for holdings is improved when adding in the company’s generous $2.31 per share dividend, yielding 5%.