Boingo CEO: Sprint deal is 'tip of the iceberg,' Wi-Fi network traffic up 60%

Boingo Wireless' CEO said the company has received "pretty amazing, pretty awesome" interest in Wi-Fi offloading and wholesaling following the announcement of the company's Wi-Fi agreement with Sprint (NYSE:S). "The level of interest I think largely is a result of the Sprint announcement, was pretty amazing, pretty awesome after last quarter. So we've engaged with several companies, as I said both carriers and other types of companies, technology companies, hardware companies, Internet companies, MVNOs. So there is a lot of interest in testing Passpoint technology and understanding how seamless handoff works from cellular on to Wi-Fi," said David Hagan, Boingo's CEO, during the company's quarterly conference call, according to a Seeking Alpha transcript of the event.

In April, Sprint struck a multi-year Wi-Fi offloading agreement with Boingo to seamlessly offload its customers' data traffic to Boingo's Wi-Fi networks at 35 major U.S. airports. The Boingo deal is one element of Sprint's evolving strategy to make Wi-Fi an integral part of its network as part of an effort to improve network performance.

According to Hagan, the agreement opened the floodgates to interest from other players.

"The market is coming to us with unprecedented interest in Wi-Fi from carriers, Internet companies, MVNOs and hardware manufacturers," he said. "The agreement with Sprint announced last quarter has sparked interest from various industry players. As a result, we have Boingo Passpoint certified Wi-Fi network nodes with multiple companies in their labs, doing interoperability testing. This is the first step in the process of getting these companies into market with Wi-Fi offload solutions, so we're encouraged by the level of industry activity."

Hagan said that, partly as a result, traffic on Boingo's Wi-Fi network continues to grow: From 2013 to 2014, he said traffic on the company's Wi-Fi network jumped 60 percent. He noted that growth rate was more than double the increase of cellular data traffic -- 26 percent -- that trade group CTIA reported in the United States during the same period.

"We believe the Sprint deal is just the tip of the iceberg for offload as we're now [in] Passpoint trials with multiple Tier 1 carriers and several major technology companies with more in the pipeline," Hagan said.

Interestingly, Hagan also said that Boingo is working to add iOS support to Sprint's offloading service, thereby allowing Sprint's iPhone users to easily roam onto Boingo's Wi-Fi network. Hagan said he expects Boingo's iOS support to launch later this year. The offload deal currently supports Sprint's Android phones.

"Higher usage and more open locations to Sprint Android customers drove the Wi-Fi offloading beat," noted analysts from investment firm Jefferies in a note to investors. "We believe Boingo has the opportunity to nearly double the ~$1.5 million incremental quarterly revenue contribution from the contract as the company expects to gain certification on Apple iOS devices in 4Q."

More recently, Boingo announced a deal with Deutsche Telekom that will allow the German carrier's business customers to access Boingo Wi-Fi hotspots via the carrier's new "Business WiFi" product.

Overall, Boingo reported revenue of $34.3 million, up 20.7 percent over the same quarter last year. The company's quarterly net loss widened to $5.9 million during the second quarter, from $3.7 million in the second quarter of 2014. The company said it continues to make progress in its Distributed Antenna Systems (DAS) business as well as its business installing Wi-Fi networks in military bases. Specifically, the company said that, through the first six months of 2015, it signed more than 30 long-term DAS contracts with the big four Tier 1 carriers, "making this our biggest year ever for DAS contracts."

For the third quarter, Boingo said it expects revenue to be in the range of $34.5 million to $36.5 million and its net loss to be between $7 million and $5.5 million.

"Boingo reported another strong quarter with both revenue and EBITDA coming in above the high-end of the guidance range and above Street estimates," the Jefferies analysts noted in their report.

For more:
- see this Seeking Alpha transcript
- see this Boingo release
- see this AP article

Special Report: Will Sprint, Microsoft, Google and others give Wi-Fi aggregators a boost?

Related articles:
Boingo sees potential Wi-Fi expansion benefits of Charter/Time Warner Cable deal
Sprint makes Wi-Fi the 'fourth layer' of its network with new Boingo deal, small cell push and Wi-Fi router
Boingo: Carrier deployments of Hotspot 2.0 are still 12-18 months away
Boingo inks Wi-Fi offload deal with Verizon, hopes for 'significant revenue' from Hotspot 2.0

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