Shares of satellite communications provider and wireless spectrum owner Globalstar (GSAT) - Get Report dropped Thursday as Verizon's (VZ) - Get Report $3.1 billion offer for wireless spectrum holding company Straight Path (STRP) trumped a deal with AT&T (T) - Get Report . Shareholders apparently expected the bidding war for Straight Path to continue.
Globalstar is a satellite carrier that owns licenses for spectrum in the 2.4 GHz band, which is much lower frequency than Straight Path's licenses and serves a different niche.
While Globalstar stock benefited from the bidding war for Straight Path, shares dropped 2.6% to $1.87 on Thursday morning. The stock is up more than 15% since its close on April 7, before AT&T announced its initial deal to buy Straight Path for $1.6 billion.
Straight Path plunged 20% to $177.98 on Thursday, falling below Verizon's agreement to pay $184 per share in stock. The two largest U.S. carriers had bid aggressively for the asset in recent weeks, and investors thought the price for strategic wireless spectrum would continue to escalate.
Globalstar won clearance from the Federal Communications Commission to use its spectrum in terrestrial wireless service in December. The company has touted the value of its spectrum for deployments of small cells, a type of wireless infrastructure that extends coverage of wireless networks in areas where traditional cell towers have insufficient coverage, such as shopping malls or arenas.
Verizon has been an advocate of using small cells to beef up networks.
Straight Path's spectrum fills a different niche, however.
Glenn Allen, Va.-based Straight Path owns millimeter wave spectrum licenses in the 39 GHz and 28 GHz frequency bands. The high-frequency spectrum can transmit data over short distances but has high capacity. Millimeter wave licenses could be useful in 5G services, in which machines, urban infrastructure and other devices will be connected to the Internet of things.
Verizon acquired rights to other millimeter wave spectrum in its $1.8 billion purchase of XO Communications Inc.'s fiber business last year.
Satellite TV provider Dish (DISH) - Get Report picked spectrum in the 28 GHz band earlier this year. The company acquired the licenses in an asset swap with EchoStar (SATS) - Get Report earlier this year.
Dish outlined its ambitions to deploy 5G services in a recent filing with the FCC, and explained the capabilities of the new service. "5G will meet the increasing demand for broadband communications by offering dramatically higher data speeds and capacity, while also addressing the needs of a networked society by enabling massive connectivity and ultra-low latency for mission critical services," Dish wrote.
Even though AT&T lost out in the bidding for Straight Path, it still stands to gain millimeter wave licenses in its purchase of FiberTower Corp., announced earlier this year.
AT&T will also collect a $38 million termination fee after losing Straight Path to Verizon.