Boingo Wireless Inc. (WIFI) priced its 5.77 million-share IPO at $13.50, within the indicated range of $12.00-14.00. The company is selling 3.85 million shares while shareholders are selling the remaining 1.92 million shares. The company says it plans to use the proceeds for working capital and general corporate purposes. Based on the $13.50 pricing, the company will have a market capitalization of $439 million. Credit Suisse and Deutsche Bank are leading the offering.
Boingo Wireless is a leading provider of Wi-Fi software and services, with more than 325,000 hotspots located in over 100 countries and over 125 network operator partners. It has long-term, exclusive contracts with venue locations that include airports, stadiums/arenas, malls/retail, and QSRs. The company says over 800M visitors annually pass through its venue locations.
Boingo Wireless believes it's in a unique position to take advantage of the foreseeable capacity crunch within the cellular network industry. According to the company, the mass adoption of data intensive applications is projected to drive a 27x increase in mobile data traffic from 236 TB per month to over 6000 TB per month (as projected by Cisco's Visual Networking Index). At the same time, the increase in 4G/LTE capacity upgrades is expected to be only about 4x.
Boingo believes Wi-Fi is the solution, as it is 6-10x faster than 3G and 4G/LTE, and it is over 75% cheaper than popular 4G cost per bit and data monthly plans. Wi-Fi is also ubiquitous, with approximately 400M devices and a large and growing base of Wi-Fi capable devices.
The company has grown revenue at a 25% CAGR from 2007 to 2010, from $41.2 million to $80.4 million. About 70% of revenue is recurring, and is divided between Retail (approximately 51% of revenue), Wholesale (approximately 44%) and Advertising and other (approximately 5%). Retail subscribers pay subscription fees on a per-month, three-month , six-month or annual basis, as well as the availability of hotspot-specific, single-house access to its network. It also generates revenue from telecom operators that pay it build-out fees and access fees. At the end of 2010, Boingo Wireless had 7.8M connects, 200k retail subs, and a monthly churn of 9.5%.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in WIFI over the next 72 hours.