FreedomPop announced today it scored an additional $50 million in new funding, as well as a new Wi-Fi hotspot that aggregates cellular networks for free data service in 25 countries in North America and Europe.
The latest cash infusion brings FreedomPop's total funding to more than $190 million. And while the company's backers include Intel Capital and Partech Ventures, today's new funding comes from a lone new investor: a private equity firm co-founder and CEO Stephen Stokols declined to name. The firm had been planning a $3 billion telecom investment in a foreign market before opting to back FreedomPop, Stokols said, and will announce the FreedomPop deal when the time is right.
The MVNO also said it has struck deals with wireless service providers in two dozen European markets to give its users free global data. FreedomPop was founded in 2011 by providing a freemium business model through Sprint's ((NYSE: S) cellular network, offering a bucket of free data and encouraging customers to purchase more. FreedomPop expanded its service to U.K. users last May.
The company's new international plans include 200 MB per month of data in the supported countries and can be accessed by any connected device including smartphones. Users may purchase additional data at $10 per 500 MB; FreedomPop launched a global hotspot for $50 and a SIM will be available for $10 on the company's website.
Stokols said FreedomPop now claims more than 1 million customers, and the company plans to use the new funds to expand not only in Europe but also Asia and South America.
"The key difference is that these aren't roaming deals," Stokols said about the new offering. "We actually have real deals in each of these markets. We're paying four or five bucks a gig, and we're able to pay all these local rates and pass that on."
Stokols went on to explain that FreedomPop's business model is based largely on selling value-added services to existing users. The company sells additional local numbers in overseas markets for a few dollars a month, for instance. "All of these value-added services we sell at an 80 or 90 percent growth margin."
FreedomPop is scheduled to post revenue in the nine-digit range this year, Stokols continued, which would demonstrate a second straight year of double-digit revenue growth. And while its aggressive growth rate has forestalled profitability, FreedomPop is on pace to become cash-flow positive late in the third quarter or early in the fourth quarter of 2016, he said.
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