Boingo Preps $75M IPO
International Wi-Fi access specialist Boingo Wireless Inc. has filed papers for an IPO that, it hopes, will raise US$75 million. The company has yet to announce a proposed price for its shares or a date when it plans to list on Nasdaq using the ticker symbol WIFI.
The company provides access to the Internet via more than 211,000 Wi-Fi access points in over 100 countries, and has struck a number of deals with device vendors to have its software integrated into mobile handsets, portable computers and even digital cameras. (See Samsung Bundles Boingo.)
It has formed partnerships with more than 125 telecom operators, including BT Group plc (NYSE: BT; London: BTA), China Telecom Corp. Ltd. (NYSE: CHA), KT Corp. and T-Mobile US Inc. , that have added their own access points to the Boingo network. (See Boingo WiFi Available on MetroPCS Androids, Boingo Adds 36,000 New Hotspots Via KT, Boingo Adds 1,600+ Hotspots in Japan and Boingo Introduces Unlimited WiFi in UK .)
The Wi-Fi service provider had 191,000 subscribers paying a monthly fee to use Boingo hotspots at the end of September 2010, up from 133,000 a year earlier, and these direct customer relationships account for the majority of the company's income. But Boingo also generates revenues from ad hoc pay-as-you-go usage, wholesale deals with communications, technology, and IT services firms, and advertising deals. In 2009, the company counted more than 800 million visits to its Boingo access points globally.
Boingo, which launched in 2001, started generating profits in 2010. Having reported a net loss of $11.2 million from revenues of $56.7 million in 2008, and a net loss of $4.2 million from revenues of $65.7 million in 2009, the company generated a profit of $1.5 million from revenues of $59 million during the first nine months of 2010.
Why this matters
This IPO will help the wireless market track key developments.
First, it will show whether there is demand from the investment community for companies such as Boingo. Any strong demand will likely be driven by an acceptance of Boingo's argument that its customer numbers, traffic and revenues will all grow as the demand for mobile data usage soars.
The company notes in its IPO filing with the Securities and Exchange Commission (SEC) that while mobile operators are investing billions of dollars in 3G and Long Term Evolution (LTE) network capacity, "these investments are not anticipated to be sufficient to relieve the strain on networks… telecom operators offer Wi-Fi solutions to off-load data. Wi-Fi provides higher speed and higher bandwidth per user in high density locations, and is simpler and less expensive to deploy than additional cellular network capacity."
Boingo adds that the growing use of smart phones and tablets is "driving a global surge in mobile Internet data traffic that is expected to increase 39 times between 2009 and 2014, according to Cisco's Visual Networking Index. We believe these trends present us with opportunities to generate significant growth in revenue and profitability."
Second, Boingo's quarterly reports will enable all players in the wireless broadband market to track the correlation between the growing use of data services (particularly video) on devices connected to mobile networks and the use of public Wi-Fi hotspots run by the likes of Boingo. That's an important metric to follow as mobile operators consider their data offload options.
Data offload is going to be a key topic as mobile data traffic volumes grow:
- WiFi Hotzones: AT&T’s Half-Baked Network Savior
- AT&T Defends Data Caps on Femtos
- What Capacity Crunch?
- MWC Preview: Data Offload to the Rescue
- Stokin' Up Mobile Data Offload
— Ray Le Maistre, International Managing Editor, Light Reading