Brief:

• AT&T invested in Magic Leap, the startup that makes augmented reality (AR) headsets, and formed a partnership that makes the telecom giant the exclusive wireless distributor for the tech brand's products in the U.S., according to an announcement.
• The companies didn't provide many details about AT&T's plans to distribute Magic Leap's products, which will be available this year. AT&T stores in Atlanta, Boston, Chicago, Los Angeles and San Francisco will have its devices for consumers to test later in 2018.
• The companies didn't disclose the financial terms of AT&T's investment in Magic Leap. The agreement completes Magic Leaps's latest fundraising round, which the company said in March totaled $963 million. The company has raised more than $2.3 billion and has been valued at more than $6 billion, per Bloomberg.

Insight:

AT&T's investment in Magic Leap comes amid a flurry of dealmaking since the telecom giant completed its takeover of media company Time Warner. Last month, AT&T agreed to buy ad tech company AppNexus, indicating clearer intentions of building an online advertising business to rival those of the "duopoly" Facebook and Google. AppNexus runs one of the biggest online ad marketplaces that let advertisers buy space among thousands of websites to target key audience groups. Its investment in Magic Leap shows that the telecom is serious about AR, which is projected to become a $90 billion market in the next five years.

For Magic Leap, the AT&T deal gives the startup stronger financial backing from a telecom behemoth and possible distribution among thousands of stores. As AT&T rolls out faster 5G mobile service, the company will have the supporting broadband infrastructure to support bandwidth-intensive AR technology. Magic Leap plans to ship its mixed reality headset, the Magic Leap One Creator, this summer but hasn't specified an exact launch date or price for the device.

The highly secretive company is planning several kinds of AR headsets for consumers and professionals at varying price points, Magic Leap CEO Rony Abovitz said at Recode's Code Media conference. The pricing for the headset is expected to be steep, comparable to high-end smartphones, which may limit the market acceptance of the device except in enterprise settings. Microsoft is focused on that market with its HoloLens, whose price starts at $3,000, per CNet.