January 19, 2017

Chief Investment Officer, Kerrisdale Capital

Straight Path Communications Inc. (STRP): Setting the Story Straight

· In the wake of its settlement with the FCC, Straight Path must sell its spectrum -- and fast, lest it face additional penalties, including a potential re-opening of an FCC investigation.

· Kerrisdale believes that Straight Path is grossly overvalued relative to the price it will actually get for its spectrum.

· Verizon is set to buy a similar amount of comparable (yet superior) spectrum for only $200 million, setting a ceiling for Straight Path that is 60% below where the stock currently trades.

· The FCC’s continued expansion of millimeter-wave spectrum supply further weakens Straight Path’s position.

We are short shares of Straight Path Communications

, a disgraced “5G” hype vehicle whose

stock price surged last week for an unusual reason:

the announcement of a harsh regulatory

crackdown. After a pseudonymous short seller in 201

5 accused Straight Path of “fraud,” the

FCC opened its own investigation into whether the c

ompany had violated its legal duty to

actually provide service rather than merely hoard s

pectrum for the sake of speculation. To end

this investigation, Straight Path agreed to pay up

to $100 million over time, surrender many of

its licenses, and sell its entire remaining spectru

m portfolio, with 20% of the sale proceeds going

to the FCC.

The market greeted this news joyously, apparently r

elieved that Straight Path had avoided an

even more draconian penalty and convinced that a sp

ectrum sale would be fast and lucrative.

This optimism is badly misplaced. Straight Path’s s

pectrum is worth far less than the company’s

current half-billion-dollar market cap. Indeed, as

we discuss below, Verizon is set to buy a

similar amount of higher-quality spectrum from a so

phisticated, deep-pocketed seller – Carl

Icahn – for just $200 million, 61% lower than where

Straight Path trades, implying massive

downside for its stock price

even before taking into account the harsh FCC penal

ties.

Adjusting

for these penalties and the lower quality of Straig

ht Path’s spectrum, we believe the true

downside exceeds 70%. The notion that a company tha

t holds less than $10 million in cash,

burns $7 million a year, and must pay out $15 milli

on in fines in the next nine months will drive a

drastically harder bargain than Carl Icahn – in a g

overnment-mandated fire sale – is beyond

absurd. Yet to own Straight Path at this price, tha

t’s what one must believe.

Further weakening Straight Path’s bargaining positi

on is the immense supply of alternative

millimeter-wave spectrum. In a rulemaking concluded

last July, the FCC effectively expanded

the 39GHz band that houses the vast majority of Str

aight Path’s spectrum by 71%; with so

much directly adjacent greenfield spectrum, Straigh

t Path’s holdings are nothing special.

Moreover, a follow-on rulemaking, initiated at the

same time and now in its final phase,

proposes to open up an additional

18 gigahertz

of mmWave spectrum for mobile use, likely

quintupling

the existing inventory and further diluting Straig

ht Path’s value.

As much as management might want to raise capital a

nd hold out for an unrealistic sweetheart

deal, a little-noticed term of the FCC settlement m

akes that a dangerous strategy, allowing the

FCC to re-open its investigation after twelve month

s and potentially revoke Straight Path’s

licenses. Likewise, shareholders confident that Str

aight Path’s former parent company will foot

the bill for its fines fail to appreciate the legal

subtleties that put this outcome in serious doubt.

But who can blame them? At this point, hope is the

only real asset Straight Path has left.

January 2017

Straight Path Communications Inc. (STRP)

Setting the Story Straight

Disclaimer:

As of the publication date of this report, Kerrisda

le Capital Management, LLC and

its affiliates

(collectively, “Kerrisdale”), have short positions

in the stock of Straight Path Communications Inc. (

the

“Company”). Other research contributors, and other

s with whom we have shared our research (collective

with Kerrisdale, the “Authors”) likewise have short

positions in the stock of the Company. The Author

stand to realize gains in the event that the price

of the stock decreases. Following publication, the

Authors

may transact in the securities of the Company. The

Authors have obtained all information herein from

sources they believe to be accurate and reliable. H

owever, such information is presented “as is,” with

out

warranty of any kind – whether express or implied –

and without any representation as to the results

obtained from its use. All expressions of opinion

are subject to change without notice, and the Autho

rs do

not undertake to update this report or any informat

ion contained herein. Please read our full legal di

sclaimer

at the end of this report.

Kerrisdale Capital Management, LLC | 1212 Avenue

of the Americas, 3rd Floor | New York, NY 10036

| Tel: 212.792.7999 | Fax: 212.531.6153

Table of Contents

STRAIGHT PATH’S SPECTRUM ISN’T WORTH MUCH .........

...................................................

II.

SPECTRUM LIKE STRAIGHT PATH’S IS ABUNDANT .........

...................................................

.. 6

III.

REGULATORY RISK STILL LOOMS .......................

...................................................

.................... 8

IV.

INDEMNIFICATION MAY NOT HELP ......................

...................................................

............... 9

CONCLUSION ........................................

...................................................

..................................... 10

FULL LEGAL DISCLAIMER .............................

...................................................

....................................11

Kerrisdale Capital Management, LLC | 1212 Avenue

of the Americas, 3rd Floor | New York, NY 10036

| Tel: 212.792.7999 | Fax: 212.531.6153

I. Straight Path’s Spectrum Isn’t Worth Much

What will potential buyers pay for Straight Path’s

portfolio? The most obvious benchmark is the

Verizon/XO Holdings deal

announced

last February. In that set of transactions, Verizo

acquired rights to two distinct assets: the fiber-o

ptic network business of XO Communications,

bought for $1.8 billion (with expected synergies an

d tax benefits valued at $1.5 billion); and the

millimeter-wave spectrum held by an XO Holdings sub

sidiary called Nextlink. In lieu of an

outright purchase, Verizon is leasing the spectrum

through 2018, with an option to buy it at

expiration, which observers widely expect Verizon t

o exercise.

Unfortunately, Verizon’s initial press release didn

’t disclose what it would actually have to pay to

acquire the XO spectrum in 2018. However, industry

sources, including the investment bank

UBS, indicate that the strike price is $200 million

. Below we reproduce the relevant section from

a February 22 UBS research note on Verizon:

UBS Disclosure of Verizon Purchase for XO Spectrum

Source: UBS, “Verizon Communications: XO Fiber Netw

ork Purchase All about 5G,”

February 22, 2016, p. 1

Investor’s Business Daily

summarized the same UBS piece and provided the sam

e $200 million

figure; the spectrum expert Tim Farrar has also all

uded to it publicly.

Though XO is a private

company (solely owned by Carl Icahn), FCC filings a

llow us calculate how much mmWave

spectrum it holds, which amounts to 189.6 billion M

Hz-pops, the vast majority of which is in the

28GHz LMDS band. Paying $200 million for roughly 20

0 billion MHz-pops implies a price per

MHz-pop – a common spectrum valuation metric – of a

tenth of a penny.

See e.g. his tweets from

July 30

(“And VZ $200M option on XO spectrum sets pretty h

ard limit on

39GHz which will be worth less per MHzPOP”) and

September 5

(“And why pay a huge premium for

midband when high frequencies will be incredibly ch

eap (viz $200M option price for XO spectrum)”).

Kerrisdale Capital Management, LLC | 1212 Avenue

of the Americas, 3rd Floor | New York, NY 10036

| Tel: 212.792.7999 | Fax: 212.531.6153

erizon/XO Implied Spectrum Pricing

Source: FCC filings, Kerrisdale analysis

Strikingly, this price closely resembles what Metro

PCS paid Straight Path for a combination of

LMDS and 39GHz spectrum in the New York, San Franci

sco, Las Vegas, and Orlando markets

in 2012 – namely, $0.0010 per MHz-pop

– implying that, notwithstanding the dawn of 5G an

renewed enthusiasm about mmWave technology, high-fr

equency spectrum prices have barely

moved. Nor is there any indication that XO’s spectr

um sparked a fierce bidding war among

Verizon’s competitors; to the contrary, Icahn’s

public statement

about the deal expresses not

triumph but resignation:

Although this sale to Verizon does not represent a

significant annualized return on our

investment, we believe that in today’s environment

it does represent the best achievable

outcome for the company’s customers, employees and

owner.

How does XO’s spectrum portfolio compare to Straigh

t Path’s? In sheer size (as well as

geographic scope), it’s similar; XO holds 190 billi

on MHz-pops, while Straight Path holds 222

billion. Simply applying the same aggregate price p

er MHz-pop to Straight Path’s portfolio would

value it at $234 million – 54% below the company’s

current market cap

even before factoring in

the FCC penalties.

Clearly the gulf between where Straight Path is tr

ading and where the

Verizon/XO transaction implies it should be is enor

mous.

Refining the analysis further, we exclude from XO’s

total MHz-pops the portion of the LMDS

band that has

not

been authorized for mobile use – everything outsid

e the A1 block that runs

from 27.5 to 28.35 GHz. Valuing non-A1 LMDS spectru

m at zero necessarily implies a higher

price for the remaining, almost entirely A1 spectru

m, which amounts to $0.0016 per MHz-pop.

While this price might serve as a reasonable benchm

ark for Straight Path’s own 28GHz A1

spectrum, it’s too high for its far larger holdings

of 39GHz spectrum, which suffer from inferior

propagation as a result of their higher frequencies

and thus are more costly and difficult to

deploy. To adjust for the difference in frequencies

, we use a

piece of technical analysis

prepared by AT&T Labs’ Advanced Wireless Technology

Group and submitted to the FCC in

See Straight Path’s

FY2013 10-K

, p. 12, and FCC filings including transaction-rela

ted public interest

statements (

). MetroPCS paid $6.8 million for what we estimate

to be ~7.1 billion MHz-pops.

XO MHz-pops (mm):

LMDS

185,811

39 GHz

3,804

Total

189,615

XO spectrum purch. price ($mm)

200

Value per MHz-pop

0.0011

Kerrisdale Capital Management, LLC | 1212 Avenue

of the Americas, 3rd Floor | New York, NY 10036

| Tel: 212.792.7999 | Fax: 212.531.6153

July 2016, comparing the simulated performance of 2

8 and 39GHz spectrum.

AT&T concludes

that “a licensee will need somewhere between 44% -

66% more spectrum in the 39GHz band to

provide the same cell edge data rate with the same

cell radius as compared to 28GHz.” If it

takes 1.44x to 1.66x more 39GHz spectrum than 28GHz

spectrum to accomplish the same

network goals, then 39GHz spectrum must only be 60-

69% as valuable.

Bringing all these

figures together below, we find that the gross valu

e of Straight Path’s spectrum is, at best, $260

million.

Str

aight Path Spectrum Portfolio:

Gross Value Using Verizon/XO Pricing

Source: FCC filings, Kerrisdale analysis

Note: 39 GHz is valued at 65% of 28 GHz (the midpoi

of 60 and 69%, as derived from the AT&T analysis

above).

But we have yet to consider the sizable negative im

pact of Straight Path’s civil penalties. Under

the terms of the

consent decree

, Straight Path has three options:

•

sell all of its spectrum within twelve months, pay

20% of the proceeds to the FCC, and

pay an additional $15 million;

•

sell all of its spectrum more slowly, pay 20% of t

he proceeds to the FCC, and pay an

additional $100 million; or

•

renounce its licenses within 12 months and pay $15

million.

Complicating matters further, if Straight Path sell

s non-spectrum assets as part of a spectrum

transaction, it may attribute $50 million in value

to those assets (“the Excluded Amount”),

reducing the size of the 20% cut it owes the FCC.

Assuming Straight Path doesn’t simply renounce its

licenses, we consider the first two scenarios

below, generously giving the company full credit fo

r the Excluded Amount (which wouldn’t apply

in a straightforward spectrum sale). In any market,

motivated sellers fetch lower prices for their

assets, and Straight Path will be no different: any

potential buyers will be well aware of the

pressures facing the company, including the step-up

in penalties associated with a delayed

sale, and they will exploit their position of relat

ive strength. Thus we assign a 20% price

Alternatively, a simple rule of thumb suggests tha

t spectrum value decreases as the square of the

frequency (because of free-space path loss), implyi

ng that 39 GHz is (28/39)² = 51% as valuable as 28

GHz, a result similar to what the AT&T analysis ind

icates.

1/1.44 = 69%; 1/1.66 = 60%.

MHz-pops

(mm)

$/MHz-

pop

Value

($mm)

28 GHz (A1 only)

46,464

0.0016

39 GHz

175,625

0.0011

184

Total

260

Kerrisdale Capital Management, LLC | 1212 Avenue

of the Americas, 3rd Floor | New York, NY 10036

| Tel: 212.792.7999 | Fax: 212.531.6153

discount in the scenario in which Straight Path sel

ls in the next twelve months. Nonetheless,

based on the XO valuation, it still appears that a

fast sale would be better for Straight Path than

incurring the $85 million penalty and holding out.

In any event, though, Straight Path

shareholders face massive value destruction, with ~

70% downside from current prices.

Straight Path Spectrum Sale:

FCC Penalty Scenarios

Source: Kerrisdale analysis

II. Spectrum Like Straight Path’s Is Abundant

Straight Path’s management likes to depict the comp

any’s spectrum as a unique asset, offering

any carrier a dominant position in the 39GHz band t

hat will supposedly be a crucial part of

mmWave 5G. Whether such technology will ever take o

ff on a large scale remains an open

question; in fact, recent writings by industry expe

rts entitled

The 5G Myth: When Vision

Decoupled from Reality

and “

5G Economics: An Introduction

” signal a broader reassessment of

whether the benefits of 5G have been overhyped in l

ight of its potentially staggering

infrastructure and operating costs. Nevertheless, i

f we just assume more carriers are interested

in acquiring mmWave spectrum for 5G, is Straight Pa

th a particularly attractive option?

No. After being forced to give up 93 of its 39GHz l

icenses as part of the FCC consent decree,

Straight Path’s remaining 39GHz portfolio contains

only 40% of the band’s MHz-pops – leaving

some 838 MHz (on a nationwide population-weighted b

asis) in the hands of others, primarily the

FCC, which will ultimately auction off unused licen

ses. Even more importantly, these figures

consider only the conventional 38.6-40GHz band, wit

h 1.4 GHz of total bandwidth. However, in

its July 2016 report and order, the FCC applied ide

ntical technical and licensing rules to the

adjacent band from 37.6 to 38.6 GHz, supplying anot

her 1,000 MHz of pure greenfield spectrum

that will also be auctioned. Furthermore, the 37-37

.6 GHz band just next door has also been

authorized for mobile use, albeit on a shared basis

with the Federal government, giving carriers

interested in mmWave experimentation yet another lo

w-cost alternative (once the sharing

arrangement is further fleshed out). The diagram be

low summarizes the setup, making it clear

Fast sale Slow sale

Gross spectrum value

260

20% duress discount

(52)

Net spectrum value

208

260

Upfront penalty

(15)

Additional penalty

(85)

FCC share of proceeds

(32)

(42)

Net company value

161

118

Per share

12.94

9.45

Downside

(68)%

(77)%

Kerrisdale Capital Management, LLC | 1212 Avenue

of the Americas, 3rd Floor | New York, NY 10036

| Tel: 212.792.7999 | Fax: 212.531.6153

that multiple carriers will find it easy to acquire

very large amounts of spectrum just like Straight

Path’s without having to engage with the company at

all. No one is clamoring to scoop up

Straight Path’s particular holdings.

Str

aight Path: 39GHz Holdings in Context

Source: Kerrisdale analysis

Note: Straight Path segment reflects nationwide pop

ulation-weighted average and assumes the company wi

successfully repack its discontiguous channels star

ting from the lower edge of the 38.6-40.0GHz band.

reality, individual geographic markets will vary.

Indeed, while Straight Path tries to focus investor

attention on just the 38.6-40GHz band in

which it holds a plurality (though not a majority)

of the MHz-pops, it’s clear that other industry

participants take a broader view. For instance, T-M

obile’s 5G-related

experimental FCC license

covers the entire 37-40GHz band (as well as the 28G

Hz band) – not just Straight Path’s piece.

The same is true for

AT&T

; meanwhile, the fixed-wireless startup

Starry

applied only to use the

lower-frequency greenfield segments. In fact, FCC r

ules now mandate that devices operating

anywhere from 37 to 40GHz must support the

entire

band, including the shared segment,

thereby ensuring that “incumbent” spectrum like Str

aight Path’s has no special advantage. With

so much highly similar supply in the pipeline and w

ith major commercial mmWave deployments

still years away, no buyer will be in a hurry to pa

y up for Straight Path.

In the months to come, the supply picture for Strai

ght Path will only get worse. Under the FCC’s

Further Notice of Proposed Rulemaking regarding mmW

ave spectrum, the agency has already

proposed to authorize mobile operations in addition

al bands containing some

18 GHz

spectrum (~27x what Straight Path holds):

•

The 24GHz band: 700 MHz

•

The 32GHz band: 1,600 MHz

•

The 42GHz band: 500 MHz

•

The 47GHz band: 3,000 MHz

•

The 50GHz band: 2,200 MHz

•

The 70/80GHz bands: 10,000 MHz

See Spectrum Frontiers

Report & Order

, paragraph 323.

Completely vacant

(37.6-38.6 GHz)

37 GHz

40 GHz

Shared

(37.0-37.6

GHz)

Straight Path

(~38.6-39.2)

Mostly vacant

(~39.2-40.0 GHz)

Kerrisdale Capital Management, LLC | 1212 Avenue

of the Americas, 3rd Floor | New York, NY 10036

| Tel: 212.792.7999 | Fax: 212.531.6153

While different bands will have different idiosyncr

asies, the overall direction of policy is clear:

much, much more mmWave will be opened up for mobile

use. In fact, in light of the current

Republican FCC commissioners’ avowed disappointment

that even more bands weren’t

opened up even faster, as well as the

Trump transition team

’s

distaste

for the warehousing of

large chunks of spectrum by the Federal government,

this trend toward increased commercial

supply will likely accelerate. Verizon was not mere

ly talking its book when it

said

the following in

October:

It would be impossible for any firm to exclude a co

mpetitor by purchasing “too much” mmW

spectrum because a large amount of mmW spectrum in

the 5G pipeline will be released

continuously for many years. So any competitor that

fails to acquire spectrum necessary for

its operations will have numerous future opportunit

ies to correct its lack of spectrum.

For mmWave spectrum, then, the FCC has ensured that

it’s a buyer’s market, not a seller’s

market, putting Straight Path in a dire position.

III. Regulatory Risk Still Looms

Despite the high cost of Straight Path’s FCC settle

ment, the company’s shareholders have

breathed a sigh of relief, glad that the regulator’

s sword no longer dangles over their heads. But,

while the settlement did resolve the FCC’s previous

investigation, a careful reading of the

underlying consent decree shows that risks still re

main in the event that Straight Path drags out

its spectrum sale. Consider paragraph 17 of the dec

ree:

Enforcement of Part 101 Discontinuance of Service R

ules. The Bureau agrees not to

pursue an investigation of Straight Path for a viol

ation of the discontinuance of service

provisions contained in Sections 101.65 or 101.305

of the Rules regarding the License

Portfolio for the period of time between the Effect

ive Date and earliest of: (i) the closing

date of the last transaction(s) to transfer or assi

gns the License Portfolio as specified in

paragraph 16; (ii) the occurrence of an Event of De

fault as specified in paragraph 19; (iii) or

twelve (12) months from the Effective Date, unless

applications are pending with the

Commission to transfer or assign the entirety of th

e License Portfolio as specified in

paragraph 16.

The “discontinuance of service provisions” are rule

s mandating that any licensee who

permanently discontinues wireless service thereby a

utomatically forfeits its license and must

notify the FCC. Straight Path has strenuously maint

ained that, when it told the FCC it provided

“substantial service” using its spectrum as of the

required buildout deadlines, it was telling the

See e.g. Commissioner

Pai

and Commissioner

O’Reilly

’s statements regarding the Spectrum Frontiers

R&O.

Kerrisdale Capital Management, LLC | 1212 Avenue

of the Americas, 3rd Floor | New York, NY 10036

| Tel: 212.792.7999 | Fax: 212.531.6153

truth – but, given that the company currently gener

ates less than $700,000 of annual revenue

from a nationwide spectrum portfolio and had to con

duct its own investigation just to ascertain

what equipment it still had deployed where, it’s cl

ear that, in any plain-English sense of the term,

it doesn’t provide “substantial service” anymore. T

he consent decree lets Straight Path off the

hook, but only for a limited time. If twelve months

elapse and Straight Path still hasn’t sold its

spectrum, the FCC reserves the right to re-initiate

an investigation – and if it finds that Straight

Path has permanently discontinued service with resp

ect to any of its licenses, the company

could simply lose them. This provision thus puts St

raight Path under additional pressure to sell

quickly; while the FCC might not

immediately

go after the company again, the prospect of

catastrophic loss through regulatory action is not

something to trifle with. Straight Path simply

doesn’t have the luxury of taking its time.

IV. Indemnification May Not Help

During Straight Path’s conference call last week, s

ome questioners appeared to be confident

that the company could force its former parent, IDT

Corporation (from which it spun out in

2013), to bear the cost of the FCC settlement, unde

r the theory that the wrongdoing that gave

rise to the settlement took place prior the spinout

. Though this idea sounds plausible, the reality

is far less clear-cut. Under the

separation agreement

between IDT and Straight Path, Straight

Path has sole responsibility for “SPCI [Straight Pa

th Communications Inc.] Liabilities,” which

include

any and all Liabilities of IDT, SPCI, or any of the

ir respective Affiliates, primarily relating to,

arising out of or resulting from the operation or c

onduct of the SPCI Business or any other

business, or the ownership or use of the Assets of

SPCI, as conducted at any time on or

after the Effective Time (including any Liability

relating to, arising out of or resulting from

any act or failure to act by any director, officer,

employee, agent or representative of IDT,

SPCI, or any of their respective Affiliates (whethe

r or not such act or failure to act is or was

within such Person’s authority), in each case arisi

ng before the Effective DateU

While this passage is poorly drafted (and even suff

ers from unbalanced parentheses), it

appears to say that Straight Path bears any liabili

ties flowing from the conduct of its business

after the spinoff date, even when those liabilities

can also be traced back to pre-spinoff actions.

But there’s a good case to be made that Straight Pa

th’s troubles with the FCC have at least as

much to do with its own post-spinoff conduct as wit

h anything that came before. While Sinclair

Upton Research accused Straight Path of simply lyin

g about its network buildout to retain its

licenses, Straight Path itself consistently maintai

ned that it told the truth, as the consent decree

itself notes:

See FY2017 Q1

10-Q

showing $159k of quarterly revenue, entirely attri

butable to the Straight Path

Spectrum segment.

Kerrisdale Capital Management, LLC | 1212 Avenue

of the Americas, 3rd Floor | New York, NY 10036

| Tel: 212.792.7999 | Fax: 212.531.6153

In response to the preliminary investigation of Mor

gan Lewis following the investigation

of a limited number of sites, Straight Path release

d a statement that “a significant

amount of the equipment that had been installed in

connection with the substantial

service showings [was] no longer present at the ori

ginal locations.” As part of the

Morgan Lewis investigation, Straight Path reported

that “[i]nterviews and

contemporaneous documents consistently confirm that

equipment was deployed at the

original locations in connection with the substanti

al service applications, but the

investigators concluded, based on the weight of the

evidence, that the equipment was

likely put in place for a short period of time at e

ach location.” The Morgan Lewis

investigation also determined that “the investigato

rs did not find any evidence that the

equipment used in connection with the substantial s

ervice applications is still present at

the originally specified locations.” U In its Octo

ber 11 LOI Response, Straight Path

argued that the prior substantial service filings m

ade for the 39 GHz licenses held by

Straight Path Spectrum, LLC had satisfied the subst

antial service rules, that the

Commission had accepted the filings, and that the 3

9 GHz licenses are not subject to

the discontinuance rules.

In other words, Straight Path and the law firm it e

ngaged never backed away from the position

that equipment really was installed to satisfy the

buildout requirements; it’s just that it was only

there “for a short period of time.” How short, and

whether that period of time varied from location

to location, has never been made clear. What the FC

C felt it had sufficient evidence to conclude

was not that Straight Path lied at the time of its

“substantial service” showings (pre-spinout) but

that it “had not actually deployed equipment with a

ny permanency.” But did that failure to deploy

“equipment with any permanency” take place before 2

013, after 2013 – or, most likely, both?

Because the FCC’s concerns pertained not just to a

discrete set of statements made in 2011

and 2012 but to an extended period of less-than-sub

stantial service spanning the pre- and post-

spinout periods, the question of who bears primary

responsibility is inherently murky. Straight

Path will argue that the failure was IDT’s, while I

DT will argue that, by Straight Path’s own

admission, the “substantial service” showings were

truthful and it was Straight Path’s own fault

that it did not maintain a level of performance acc

eptable to the FCC in 2013, 2014, 2015, and

2016. Because the underlying legal issues are genui

nely uncertain, it’s naïve to expect IDT to

simply hand over the money without putting up a fig

ht, and it’s perfectly possible that Straight

Path will walk away empty-handed and face the full

brunt of the penalties on its own.

Shareholders betting on a rapid and favorable resol

ution will likely be disappointed.

V. Conclusion

Trading near its peak market cap despite a harsh re

gulatory crackdown and an onslaught of

competing spectrum supply, Straight Path is highly

overvalued. Simply using the Verizon/XO

mmWave spectrum transaction as a benchmark implies

a share-price decline of ~70% – and,

given the weakness of the company’s position, it co

uld easily be worse. The path has always

been more crooked than straight, and now it's comin

g to an end.

Kerrisdale Capital Management, LLC | 1212 Avenue

of the Americas, 3rd Floor | New York, NY 10036

| Tel: 212.792.7999 | Fax: 212.531.6153

Full Legal Disclaimer

As of the publication date of this report, Kerrisda

le Capital Management LLC and its affiliates

(collectively "Kerrisdale") have short positions in

the stock of Straight Path Communications Inc.

(“STRP”). In addition, others that contributed res

earch to this report and others that we have

shared our research with (collectively with Kerrisd

ale, the “Authors”) likewise have short

positions in the stock of STRP. The Authors stand t

o realize gains in the event that the price of

the stock decreases. Following publication of the r

eport, the Authors may transact in the

securities of the company covered herein. All conte

nt in this report represent the opinions of

Kerrisdale. The Authors have obtained all informati

on herein from sources they believe to be

accurate and reliable. However, such information is

presented “as is,” without warranty of any

kind – whether express or implied. The Authors make

no representation, express or implied, as

to the accuracy, timeliness, or completeness of any

such information or with regard to the

results obtained from its use. All expressions of o

pinion are subject to change without notice,

and the Authors do not undertake to update or suppl

ement this report or any information

contained herein.

This document is for informational purposes only an

d it is not intended as an official

confirmation of any transaction. All market prices,

data and other information are not warranted

as to completeness or accuracy and are subject to c

hange without notice. The information

included in this document is based upon selected pu

blic market data and reflects prevailing

conditions and the Authors’ views as of this date,

all of which are accordingly subject to change.

The Authors’ opinions and estimates constitute a be

st efforts judgment and should be regarded

as indicative, preliminary and for illustrative pur

poses only.

Any investment involves substantial risks, includin

g, but not limited to, pricing volatility,

inadequate liquidity, and the potential complete lo

ss of principal. This report’s estimated

fundamental value only represents a best efforts es

timate of the potential fundamental valuation

of a specific security, and is not expressed as, or

implied as, assessments of the quality of a

security, a summary of past performance, or an acti

onable investment strategy for an investor.

This document does not in any way constitute an off

er or solicitation of an offer to buy or sell

any investment, security, or commodity discussed he

rein or of any of the affiliates of the

Authors. Also, this document does not in any way co

nstitute an offer or solicitation of an offer to

buy or sell any security in any jurisdiction in whi

ch such an offer would be unlawful under the

securities laws of such jurisdiction. To the best o

f the Authors’ abilities and beliefs, all

information contained herein is accurate and reliab

le. The Authors reserve the rights for their

affiliates, officers, and employees to hold cash or

derivative positions in any company discussed

in this document at any time. As of the original pu

blication date of this document, investors

should assume that the Authors are short shares of

STRP and stand to potentially realize gains

in the event that the market valuation of the compa

ny’s common equity is lower than prior to the

original publication date. These affiliates, office

rs, and individuals shall have no obligation to

inform any investor or viewer of this report about

their historical, current, and future trading

activities. In addition, the Authors may benefit fr

om any change in the valuation of any other

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| Tel: 212.792.7999 | Fax: 212.531.6153

companies, securities, or commodities discussed in

this document. Analysts who prepared this

report are compensated based upon (among other fact

ors) the overall profitability of the

Authors’ operations and their affiliates. The compe

nsation structure for the Authors’ analysts is

generally a derivative of their effectiveness in ge

nerating and communicating new investment

ideas and the performance of recommended strategies

for the Authors. This could represent a

potential conflict of interest in the statements an

d opinions in the Authors’ documents.

The information contained in this document may incl

ude, or incorporate by reference, forward-

looking statements, which would include any stateme

nts that are not statements of historical

fact. Any or all of the Authors’ forward-looking as

sumptions, expectations, projections, intentions

or beliefs about future events may turn out to be w

rong. These forward-looking statements can

be affected by inaccurate assumptions or by known o

r unknown risks, uncertainties and other

factors, most of which are beyond the Authors’ cont

rol. Investors should conduct independent

due diligence, with assistance from professional fi

nancial, legal and tax experts, on all

securities, companies, and commodities discussed in

this document and develop a stand-alone

judgment of the relevant markets prior to making an

y investment decision.