AT&T announced a $1.6 billion deal to acquire Straight Path Communications, a spectrum licence holder, in a move designed support the US operator’s future 5G ambitions.

Straight Path Communications holds licenses of millimetre wave (mmWave) spectrum in the 28GHz and 39GHz bands, both of which have already been approved by regulator the Federal Communications Commission (FCC) to be used for 5G.

In a statement announcing the deal, AT&T said the move complements its acquisition of FiberTower, which it completed in January, “and augments the company’s holdings of mmWave spectrum”.

The second largest operator in the US is competing with rivals, including market leader Verizon to take a 5G leadership position in the country, and is planning to build its 5G network using mmWave spectrum.

Through Straight Path Communications, AT&T will acquire 735 mmWave licenses in the 39GHz band and 133 licenses in the 28GHz, which cover the whole of the US including all of the top 40 markets.

Bloomberg reported Straight Path Communications is the third largest owner of spectrum licenses approved by the FCC for 5G use, but the company was under pressure to sell after being hit with an FCC fine.

The regulator found the company had misrepresented putting the spectrum to use, and imposed a $15 million fine in January, with a further $85 million suspended until next year. If Straight Path Communications sold the licenses within the timeframe, it would have to pay 20 per cent of the proceeds to the regulator.

Terms of the deal with AT&T includes liabilities and amounts to be remitted to the FCC, so Straight Path shareholders will receive $1.25 billion in total.

AT&T said the deal is subject to FCC approval and should complete in the next 12 months.