Digital Colony swallows Boingo Wireless for $854m

Mike Finley Boingo.jpg

Mobile infrastructure and wifi company Boingo Wireless is to become part of Digital Colony’s empire, which already includes FreshWave, Highline do Brasil and 50% of Zayo.

The private investor said yesterday that it will pay US$854 million for the company, and added that it will “continue investing in Boingo’s diverse network”.

Boingo CEO Mike Finley (pictured) said the deal “will deliver significant and immediate value to Boingo’s stockholders and concludes a robust strategic review process undertaken by Boingo over the past year”.

He added: “We believe Digital Colony’s expertise owning and operating digital infrastructure businesses, combined with its relationships, resources and access to long-term, private capital markets, will provide greater flexibility for Boingo to continue advancing its business strategy.”

The two sides said they expect the transaction to be completed quickly, in the second quarter of 2021.

The announcement came as Boingo, which is Nasdaq-listed, said revenue had declined 10% to $237.4 million in 2020 compared with the previous year, but adjusted Ebitda rose 1% to $83.5 million.

Boingo Wireless is in a similar market to Digital Colony’s London-based FreshWave, a unified brand adopted in January 2020 for three acquisitions, StrattoOpencell, iWireless Solutions and Spyder Facilities, bought between August 2018 and June 2019.

FreshWave, like Boingo, builds and operates wireless infrastructure, using technologies and infrastructure solutions including indoor and outdoor distributed antenna systems (DAS), small cell networks and macro cell towers.

Boingo reported yesterday, with its annual results, that it has completed a restructure into separate business areas.

Carrier services reported revenue down 7.0% to $107.7 million, with profit margin down from 44.4% in 2019 to 37.0%.

Military revenue of $76.8 million was up 2.5% compared to 2019, with a gross profit margin of 76.2%.

Boingo’s private networks and emerging technologies unit recorded revenue of $2.2 million, an increase of 10.4% on the previous year. Its multifamily unit revenue was $21.6 million, a decrease of 13.8%. Legacy revenue was $29.1 million, a decrease of 36.7%.

Finley reported: “The headwinds resulting from Covid-19 accelerated the anticipated decline in our legacy retail and advertising products as well as delayed progress on several projects into 2021.”

But he noted new business. The company signed a tier 1 carrier to a branch of the New York Metropolitan Transportation Authority (MTA) Long Island Rail Road, and “we signed a Wifi offloading contract with a Tier 1 carrier to begin to utilize Boingo’s Wifi footprint.”

He said that, following the Digital Colony acquisition, “our team at Boingo will continue to execute our strategy with access to more capital and resources to expand our network and robust suite of products and services. Following a year-long formal strategic process through a once-in-a-century pandemic, we could not be more thrilled with the outcome which we believe maximises value for our stockholders.”

Digital Colony, led by Marc Ganzi, and Swedish investor EQT infrastructurecompleted their $14.3 billion deal to buy Zayo in March 2020