Boingo Wireless, Inc.
Q3 2013 Earnings Call Transcript

Published: 9 Nov 2013

[Operator:]

Greetings. And welcome to the Boingo Wireless third quarter 2013 earnings conference call. (Operator Instructions) It is now my pleasure to introduce your host, Kimberly Orlando of Addo Communications. Thank you, Ms. Orlando. You may begin.

[Kimberly Orlando:]

Thank you and welcome to Boingo Wireless' third quarter 2013 earnings conference call. By now, everyone should have access to the earnings release, which was issued today at approximately 4'o clock PM Eastern Time. If you have yet to receive the release it is available on the Investor Relations portion of Boingo's website at www.boingo.com by clicking on the Investor tab. This call is being webcast and it is available for replay. In our remarks today we will include statements that are considered forward-looking within the meanings of Securities Laws. In addition, management may make additional forward-looking statements in response to your questions. Forward-looking statements are based on management's current knowledge and expectations as of today, November 7, 2013 and are subject to certain risks and uncertainties that may cause the actual results to differ materially from the forward-looking statements. A detailed discussion of such risks and uncertainties are contained in our most recent Form 10-Q, for the quarter ended June 30, 2013 filed with the SEC on August 9, 2013. The company undertakes no obligation to update any forward-looking statements. On this call we will refer to non-GAAP measures that when used in combination with GAAP results, provide us with additional analytical tools to understand our operations. We have provided reconciliations of non-GAAP to GAAP measures in our earnings release. And with that, I'll hand the call over to Boingo's CEO, David Hagan.

[David Hagan:]

Good afternoon, everyone, and thanks for joining us today to discuss our financial results for the third quarter of 2013. Our positive momentum continued through the third quarter, with major new managed and operated networks taking center stage among our strategic initiatives, providing additional networks to drive retail, wholesale and advertising revenues going forward. We continue to invest in the business, both in the context of upgrading existing networks to meet the needs of rapidly growing data demand, but also in the acquisition of new networks that we will begin monetizing in 2014. Our financial results for the third quarter were positive. Revenue came in at $28.6 million, slightly above the high-end of our guidance range. And while retail and advertising played a role, our wholesale DAS business made a considerable contribution during the quarter. We registered $7.4 million in EBITDA, which was in the middle of our third quarter guidance figures. However, our EBITDA would have been in the upper range, if not for our need-to-hire operation staff in order to begin fulfilling two new very large military contracts, which I'll discuss in more detail later on this call. Overall, our financial position remained strong, which gives us the flexibility to pursue these kinds of strategic growth opportunities, while at the same time being able to return value to shareholders for our stock repurchase program. In the third quarter, we repurchased about $1.5 million in Boingo stock, brining our repurchase total to $2.5 million, which is 25% of the planned repurchase. We continue to make significant strides in our strategic efforts to expand the Boingo managed and operated network. The expansion of the M&O network is the foundation that drives our business. It enhances the value of our network for wholesale partners, it expands our advertising inventory and it increases the surface area of our retail sales group to generate subscribers. In the third quarter, we announced an agreement to acquire Advanced Wireless Group, also known as AWG, a provider of airport Wi-Fi in the U.S. This acquisition officially closed on October 31, and bring 17 new U.S. airports that reach 350 million passengers per year, enter the Boingo network of managed and operated Wi-Fi hotspots. These include six of the top-20 airports in North America, Los Angeles, Charlotte, Miami, Minneapolis, Detroit and Boston. This strategic acquisition is expected to be modestly accretive in 2014, and the impact is contemplated in our updated 2013 guidance. This network addition will allow us to recognize some revenue synergies, as it relates to retail subscriptions, advertising and wholesale revenue utilization. Another major initiative to expand our managed and operated network began in February with the acquisition of Endeka Group, which holds a broadband internet and IPTV service contract for troop's barracks with MCI West, which represents seven Marine Corps bases in the western half of the U.S. This military market opportunity has been dramatically expanded with two new contracts announced this week. One with the Marine Corps Community Services, which augments the MCI West regional contract with the worldwide agreement covering all marine bases and one with the Army and Air Force Exchange, which includes worldwide responsibility for army and air force bases. To put these contracts into perspective, point of entire managed and operated network currently includes about 3,000 Wi-Fi access points in about 6,000 DAS notes. These two contracts, which cover more than 300,000 beds in army, air force and marine bases around the world, will require us to install an estimated 35,000 to 40,000 additional Wi-Fi access points. We believe that this is a tremendous market opportunity, as we are able to bring in a compelling product offering to the military personnel, who see connectivity as an integral part of their lives. As our traditional retail paid Wi-Fi business flattens out due to hybrid pricing in most airports, we believe the military opportunity will become the new retail growth driver. The marine contract includes more than 700 buildings on 30 marine bases around the world. We are working with the marines to prioritize the bases for deployment with the goal of rolling out service to many of the bases in 2014. The Army-Air Force contract is structured in phases with the first phase covering 600 buildings on 13 bases that are on track to be deployed in early 2014. Upon completion of the first phase, Boingo will work with Army-Air Force Exchange to determine timing for additional bases in the second phase. Both of these contracts are 10 more years in length and are expected to impact our profitability in the next few quarters, as we aggressively add new staff and increase CapEx to accelerate these installations with the long-term benefit of the retail revenue growth engine. The impact has been moderate today with some pressure on EBITDA and net income in the third quarter, as we hired new staff and began ordering backhaul circuits for the bases. But we expect the cost impact to become more apparent, as the network rollouts gain momentum in the fourth quarter of 2013 and end of 2014. We also believe that ROI and the substantial upfront investments will payout in three or four years with monetization of the networks expected to contribute in the second half of 2014, as new bases come online and we are able to market our broadband and IPTV products. On our last call, we also emphasized the expansion of our managed and operated DAS business, as another strategic growth initiative for Boingo. Our momentum in this regard continues with the previously announced Pinnacle Bank Arena and University of Arizona DAS build-outs continuing to move toward completion. The Pinnacle Bank Arena network should go live later this quarter with UofA coming online at early 2014. We also believe there will be incremental DAS opportunities via both new military contracts as server coverage is typically weak on military bases due to their remote locations. In addition, we recently announced the launch of a newly upgraded DAS network jointly deployed with AT&T, as Chicago's Soldier Field. As the neutral host partner of this co-owned network, Boingo serves as a leasing agent to Verizon, Sprint, T-mobile and second-tier carriers, while AT&T manages its own accessibility on the network. This upgrade increased capacity by 100% with more than 250 DAS antennas spread throughout the stadium, creating one of the most advanced wireless stadium networks in the country. Our DAS opportunities stems from the mobile careers need to offload users on to small cells in high traffic areas, like stadiums and airports to enhance coverage and capacity on the small cells in high traffic areas like stadiums and airports through enhanced coverage and capacity on the macro network and to ensure the best possible user experience in difficult wireless environments. In the context of carrier offloads this is the mobile carrier's current emphasis, leveraging in-building, licensed spectrum solutions like DAS. Carrier offload is also projected to be a significant growth driver for the Wi-Fi industry. Industry research firm IGR predicts that career-driven Wi-Fi offload will grow at a compounded annual rate of 215% between 2012 and 2017. And we are still in the industry development phase in which industry participants are contributing to getting network plumbing ready. As we've discussed previously, the wireless broadband alliance is currently coordinated with Next Generation Hotspot industry trials, which leverage evolving industry standard to simplified seamless Wi-Fi access. In the third quarter, Boingo launched the first live commercial Next Generation Hotspot and we activated a fully pass-point enabled network at Chicago's O'Hare International Airport. This Hotspot 2.0 network now serves as one of the world's largest NGH test beds, accessible to carriers and handset manufacturers that want to test their implementations in a production environment, which is a helpful step forward for true, seamless carrier offloads. The WBA will host the live NGH experience at the Wi-Fi Global Congress later this month in Beijing, where China Mobile and CISCO will deploy network in the conference center that is NGH enabled for 13 additional mobile operators, including Boingo, AT&T, BT, Orange, KT, and NTT Docomo and CableLabs, to roam onto the network using Hotspot 2.0 technology. Each of these public network deployments helps the industry take one step close to widespread commercial deployment with standardized and simplifies the process of connecting mobile devices to Wi-Fi network seamlessly. We're firm believers that this will facilitate wholesale access growth in the future via carrier offload. Our expansive managed and operated Wi-Fi networks in high traffic venues, puts us in a strong position to capitalize on this as the shift occurs. With that, I'd like to turn it over to our CFO, Peter Hovenier to review our financials for the third quarter. Pete?

[Peter Hovenier:]

Thanks Dave. Today I'll begin by reviewing our financial results and key operating metrics for the third quarter ended September 30, 2013, and we'll then conclude our financial hours for the year 2013. Total revenues $28.6 million represented 10% increase over the prior year period. The increase reflects growth in wholesale, advertising and retail subscription revenue, partially offset by a decline in retail single-use revenue. Across our diversified revenue stream also represent 50% of third quarter revenues, retail represent 39% and advertising accounted for the remaining 11% of revenue for the quarter. Also our revenue totaled $14.3 million, representing a 23.2% increase for the comparable period last year. The increase in wholesale revenue primarily reflects an increase in new DAS build-out projects, including a $2.5 million one-time build-out project that was completed during the quarter, as well as increased service provider fees. This increase was partially offset by decreased partner usage based fees, which also included minimum volume commitment. Retail subscription revenue of $8.9 million represented 2.8% increase over the prior year period. This increase was due to growth in our retail subscriber base, partially offset by decrease in average monthly revenue per subscriber resulting from increased promotional offers and the growing mix of our lower-priced smartphone or tablet-only subscriptions. Retails single-user revenue was $2.4 million, representing a 27.8% decline from third quarter of 2012. The decline primarily reflects the loss of certain managed and operated locations, the transition of some additional paid managed and operated locations to a tiered or pre-pricing model, as well as the increase in customers opted for subscriptions. Advertising and other revenue was $3 million, representing a 23.2% increase over the prior year period. The increase is primarily due to the continued positive momentum from our ongoing investments in the Boingo media advertising platform and an increase in other revenues. Now, turning to our third quarter cost and operating expenses. Network access cost totaled $13.7 million, representing a 35.9% increase over the third quarter of 2012. The increase is primarily attributable to increased cost related to the sale of equipment for venue build-outs, particularly in one-time build-out projects as well as increased bandwidth and depreciation expenses. Partially offsetting these increases was decreased revenue share paid to venues in our managed and operated locations. Gross margin, which is defined as revenue less network access costs was 52.2%, down from 61.3% from the prior year period. The decline in gross margin largely reflects the impact from the previously mentioned significant one-time DAS build-out projects. Further contributing to this decline was a shift in the diversified revenue stream, driven by reduced higher-margin retail single-use partner usage based fee revenue, coupled with increased growth in our lower margin wholesale DAS build and advertising revenues. Network operation expenses total $4.5 million, an increase of 21.7% from the comparable 2012 quarter, primarily due to increased personnel related expenses driven by new headcount to support the rollout of our military contracts an increased depreciation expenses. Development and technology expenses were $2.6 million, up 14% to the comparable quarter last year, due primarily to increased personnel related depreciation expenses. Selling and marketing expenses were $3.3 million, a 28.3% increase over the comparable 2012 quarter, due primarily to increased personnel related expenses resulting from investments at Boingo Media and Boingo broadband sales and business development teams. General and administrative expenses were $3.2 million, a 7.7% increase from the comparable 2012 quarter, due primarily to increased professional fees and personnel related expenses, partially offset by decreased consulting fees. Now turn to our profitability measures. Net income attributable to common stockholders was $100,000 or $0.01 per diluted share versus net income of $2.8 million or $0.07 per diluted share in the prior year quarter. Adjusted EBITDA was $7.4 million, a decrease of 12.1% comparable to 2012 quarter. Please refer to our earnings release for the definition and reconciliations of non-GAAP measure. In terms of our operating metrics, we ended the third quarter were connects or paid usage on a worldwide network of approximately $10.9 million, up 22.3% from prior year period and down 3% from the second quarter of 2013. The increase of this versus the prior year quarter is primarily due to increased connects in advertising sponsorships. Compared to last quarter, we experienced a modest decline in connects from our advertising sponsorships in our advertising-only locations. Our retail subscriber base was 313,000 subscribers at the end of the third quarter, which is up 7.2% from the prior year period, flat to the second quarter of 2013. As compared to the prior year period, our subscriber base continue to benefit from growth in installed base of smartphones and tablets, and from the continued improvements in our conversation of single-use customers to one of our retail subscription plans. Our monthly churn rate for the third quarter was flat with last quarter at 10.2%, and an increase from 9% from the comparable 2012 quarter. The increase in churn is due primarily to cancellations from customers required on a commercial plan. Moving on to discuss our balance sheet. At September 30, 2013, cash, cash equivalents and marketable securities totaled $81.2 million or $2.19 per diluted share outstanding and remained essentially debt free. Capital expenditures were $6.9 million, which included $5.2 million utilized for DAS infrastructure build-out projects that are reimbursed by our telecom operator partners. Our non-reimburse capital expenditures were driven primarily by new network builds, mainly related to [indiscernible] military bases, network upgrades and system enhancements and preparation for increased traffic from carrier offloading. I would now turn to our outlook. For the full year 2013, we are updating our guidance as follows. We now expect total revenue to be in a range of $106 million to $108 million. Adjusted EBITDA to be in the range of $24 million to $26 million and net loss attributable to common stockholders to be in a range of $2 million to breakeven or loss of $0.06 to breakeven per diluted share. We continue to expect the full year tax rate of approximately 35% and we have updated our fully diluted shares outstanding forecast to $35.7 million to reflect our updated profitability guidance. Our revised outlook reflects the following factors. With respect to revenue, we now anticipate being at the low to midpoint of our range. This was primarily attributable to wholesale revenue and reflects a timing shift in certain DAS build-out projects due to delays in the supply chain for DAS equipment. With respect to profitability, we're lowering our guidance primarily to reflect the significant investment in military verticals to support our new contract that Dave just discussed. Near-term investments aside, we're incredibly excited about these new contracts and have long-term opportunity in the military vertical, as we expect to begin monetizing these new contracts in 2014. Our profitability guidance further reflects non-recurring transactions and integration expenses related to AWG acquisition and the updated revenue forecast that I just discussed. That concludes my prepared comments. Dave?

[David Hagan:]

Thanks, Pete. We're pleased with the progress we made through the first nine months of the year and we remain well-positioned to drive future growth. Investment will continue to be our core theme as we build-out the military bases, launch new DAS deployments, and continue upgrading M&O networks to keep pace, insatiable demand for data and prepare for carrier offload. We believe these investments will begin to contribute in the second half of 2014, but will put some short-term pressure on profitability through the end of this year and end of 2014. The scope of M&O growth projects currently underway is unprecedented in our history and we believe will fuel long-term profitable growth company. With that, I'd like to turn it over to the operator for questions. Operator?

[Operator:]

(Operator Instructions) Our first question is from the line of James Breen with William Blair.

[James Breen:]

Just a couple of questions. One, with respect to where the guidance is given when the AWG deal closed, is that sort of planned in terms of any increased revenue, if you get there relative to the stuff that was pushed-off on the DAS side? And then as you think about the new military contracts, what's the potential, I'm trying to think about the size potential, in terms of addressable market? Do you have any idea of how many soldiers are on these bases in total that you potentially could be selling into?

[David Hagan:]

I'll start-off and then I'll hand it over to Pete on the guidance question. So we'll start with your second question, first. On the military contract, so if you think about the branches of government, we now have the marine, the air force and the army under long-term contract for the bases on a global scale, so navy is not included, and then a couple of smaller branches. So we've got, if you will, sort of three quarters of the military market under contract and now it's our responsibility and job to go execute those builds. So this is a significant contract. We'll include a little more detail when we give guidance for next year, but that's why we talked about the number of access points that will be building out the 300,000 beds, barrack beds, if you will, for these two contracts that we just signed, 35,000 to 40,000 access points. So we're trying to give you some sense of the scale of the opportunity, because it is a very big opportunity for us. So on the guidance question, Pete, I'll hand it over to you.

[Peter Hovenier:]

So yes, AWG is in our guidance and it really won't contribute in a meaningful way at all in 2013, it's only been two months worth. And as you know, advertising is really booked now or actually earlier now for Q4 and bulk of the AWG revenue would be advertising related.

[James Breen:]

And then just in terms of the topline, you mentioned the couple of DAS projects that got pushed-off. When I sort of look at where the midpoint of your guidance range is now for revenue, it sort of implies, not a lot of sequential growth from the third to the fourth quarter. Given the push-off in those projects, should that accelerate a little bit as we head into the first quarter of next year and you start to monetize those projects?

[David Hagan:]

You'll see continued growth in 2014 when we give guidance, but obviously we'll hold off on that one when we give guidance next year. But really, when you think about these DAS projects, it is nothing dramatic in aggregate, but it's about quarter for quite a few deals that have shifted out.

[James Breen:]

So that shifted out in quarter, one quarter?

[David Hagan:]

One quarter.

[Operator:]

Our next question is coming from the line of Brett Feldman of Deutsche Bank.

[Brett Feldman:]

I guess it would be helpful, if you can maybe give us a little more granularity around the fourth quarter, just because you mentioned that AWG is coming in and it's going to be part of advertising. The fourth quarter is the time of the year where you typically see the biggest inflation in your advertising revenues, but that's going to be probably different this year than maybe we've seen in the past, probably better. So if you can give us a little more color in terms of what type of trends you're looking for in that line item in 4Q, that would be helpful. And then also how are you thinking about the existing retail subscription business? You mentioned how it's sort of is flattening a bit. What's kind of the go-forward forecast that you use as a foundation for building out your business model? Do you think of it as being stable or do you actually believe that it could potentially start to decline as people sort of adopt different ways of using Wi-Fi, and that you're going to be supplementing that with some of the other transactions you talked about on the call?

[David Hagan:]

On your first question, so advertising as you would expect is generally skewed, it's very positively towards Q4. The holiday shopping season, it's the biggest advertising quarter of the year, by far. And we expect to have a really nice quarter. In terms of that AWG impact within the quarter, however we're not getting a lot of that because the media buys, if you will, have already been placed. The insertion order has already been placed. So there is not a lot of incremental advertising for us because of the AWG deal in Q4. And we expect to see that in 2014, but you're not going to see lot of it in Q4. On the sub-business it's really not driven by, you're commenting that people using other types of devices, it's less about that because there are plenty of devices coming to market that are Wi-Fi-only, right. Most tablets are Wi-Fi-only, as an easy example. It's more about the types of networks that we're building and the pricing structure other those networks have.

[Brett Feldman:]

That's what I was referring to actually, is that that there's a lot of different ways people can access Wi-Fi and you're participating in a lot of those evolutions of the model. And so I was just kind of wondering, what is the foundational assumption about that subscription business?

[David Hagan:]

So in the near-term we expect subscription in the airport Wi-Fi space, so it's kind of the core business, non-military, to be flattish with the AWG locations coming in some of which are pay, we can get a little bit of lift, but in general, we're seeing that as a pretty flat market. The military opportunity, which is subscription based is huge. And we do expect to grow our retail subscriptions really on the back of the military business more than the airport space. So think of the airport, it's pretty flat, growth coming from the military vertical.

[Brett Feldman:]

And then I missed it, if you gave it. I heard the churn for the quarter, did you give the net add number?

[David Hagan:]

We are flat, Brett.

[Operator:]

Our next question is from the line of James Faucette of Pacific Crest.

[James Faucette:]

I wanted to follow-up on the question related to DAS. And you made it sound like, or at least I heard it as if there had been some problems with equipment deliveries or deployment. I was just wondering if you can expand on that a little bit, just give about other sense as to maybe just delaying some of those DAS build-outs?

[Peter Hovenier:]

James, I think it's a sign of the market, right, for there so much DAS building going on, and Boingo is doing it. The carriers are doing some of it themselves, TowerCo's are doing it, that the supply chain struggled in the last quarter to the fulfill orders. And so we brought on another supplier as an example of a potential solution for that, but because these are carrier networks, we are limited on the number of suppliers that we can go with. They have to be carrier-certified. So there has been a real supply chain jam up on DAS gear, and we're working with our suppliers to give long-term forecast, so that they can build to those forecasts, so we don't have this problem in the future, but it has been short-term problem for us.

[James Faucette:]

And so as you've added suppliers and the like, do you see that freeing up, or is this, do you feel like going to become a persistent problem for the foreseeable future?

[David Hagan:]

We're hoping that it's not and certainly adding a second core supplier that is certified with the carriers, it eliminates a lot of risk, I think. And then our forecast planning with our vendor partners should get them more comfortable with turning on the manufacturing engine a little more aggressively. So those two things combined, we don't expect to see this continue.

[James Faucette:]

And I wanted to just touch quickly on the rollout of Hotspot 2.0 at O'Hare. Just kind of, if you could lay out a timeframe, when you think that that will start to have impact commercially and be available through more outputs. In your prepared comments, it sounded like this was kind of a trial rollout so that people can and that carriers now really get all of their authentication protocols dialed in and that kind of thing. But just more insight into how that's going to rollout, would be helpful.

[David Hagan:]

The industry is still in the development phase, as I said in my comments. So the trial was one aspect of the first production Hotspot 2.0 on locations. We expect to have carriers and some OEMs testing in a production environment, which we think is a good thing to move the industry forward. I've mentioned that in Beijing, coming up there's another trial going on that China Mobile and CISCO are building with 13 carriers, including Boingo roaming on to it. It's a WBA conference. So these are all industry developments that are happening, that are getting us closer to the reality of carrier offload. But that said, it is an entire industry that has to move along and get it done. And as you probably know the entire industry don' move fast. So we're obviously bullish on it. We've upgraded our large venues to be Hotspot 2.0 ready in addition to the O'Hare installation. So we're in great position for it. We've made those investments, but it's not a near-term revenue impact, in opportunity it's a long-term massive revenue opportunity. But it's still several quarters out before I think we'll see something meaningful on it.

[James Faucette:]

And then last question from me. I guess maybe a better question would be, if we look at, at least the way we had modeled the gross margins, it looked like we took a pretty big step down. And I can appreciate, that a lot of your comments were around things like build-outs and adding additional headcount. But can you give us a little bit sense of how those additional expenses are hitting the P&L? And just because it seems to me like a lot of those would be in the form of additional OpEx or they would be more muted, because of they'd largely be depreciation related. So just kind of wondering how the different aspects are hitting that different points in that P&L statement?

[David Hagan:]

On the gross margin standpoint, really there is a couple of things going on. So number one, you have the significant DAS build-outs project, which we called out. And that's really about half of the gross margin change on a year-over-year basis. And then the other piece is really there is a shift in the mix of our revenue. We are adding lower margin, wholesale DAS build and advertising revenue, but we're down in retail, single-use and our partner usage base fee revenue, which is higher margin revenue.

[James Faucette:]

And so sorry to elaborate this on the call, but on the DAS build-out though, is that impacting your cost of goods, because you're having to pay for things like backhaul-related service before you're billing that and able to collect revenue against it? Or I guess I'm just trying to understand why build-out would be hitting COGS right now?

[David Hagan:]

Yes. So the build, in this particular one, it also include the sale of equipment. So there is the revenue that comes along with it, but there's also the equipment piece, which is a cost of goods.

[Operator:]

Our next question is from the line of Donna Jaegers of D.A. Davidson.

[Donna Jaegers:]

Given that you've rolled out in Pendleton now, can you talk about what your experience has been there so far, so we can get a flavor for how fast maybe when the military contracts are installed, how fast they could kick-in?

[David Hagan:]

The Pendleton rollouts has been quite successful. We're pleased with the progress there, both the network itself and the product offering and the take up that we're seeing amongst the military personnel, that the challenge in this business is we have to build the networks. We'll have to design the networks, build the network and then we can monetize them. So we have the contract in place. Literally this week, we have teams on five or six different military bases getting designs approved, so we can start the construction phase. There is a lag between deploying the capital, hiring the people and seeing the revenue come in. So the good news is these are both 10-plus year agreements, but it's a pretty massive build-out for us. But we love the model. It's very much a high margin business from a gross margin and EBITDA perspective. So that will be very accretive to our overall business, as we start ramping this up. The return on capital is between three and four years, and given the length of the agreements, we think that's a really strong financial aspect to this. So it's a big opportunity and we're chopping it a bit to really get rolling on it and to start monetize it.

[Donna Jaegers:]

And then on AWG, can you give any other data that you can give us as far as what their revenues were last year? What sort of price you paid? Any sort of synergies you had, because they outsourced their advertising I believe. So does that help you guys going forward if you bring that in-house?

[David Hagan:]

So I'll answer the end of that. So yes, they have outsourced advertising over time, we'll bring that in-house onto our platform. There is clearly synergy there, so our sales force will be out, selling the networks that is Boingo today and now we've added to that network. So there's synergy making that ad sales force more effective. Typically, advertisers are buying audiences and now we can deliver the same demographic, a very compelling business traveler demographic on our airport networks, but now we can sell it in a broader sense, to a larger audience. So that's where we see the synergy. In terms of price of the deal and economics, we haven't released that. It's in our 2013 guidance, and for yearend and when we rollout the 2014 on the next call, we can talk a more specifically about it.

[Donna Jaegers:]

And would there be a possible synergy since AWG was not doing DAS networks on the airports? Is that a potential longer-term as you talk to each of the airports?

[David Hagan:]

Absolutely, so only one of the airports that we acquired through AWG has a DAS network. So we planned it to be in conversation with them and we do see a nice opportunity there.

[Donna Jaegers:]

And then just one other quick question on advertising. Can you give us any more definition, I mean you just said, you were happy with it. Obviously, we've got the numbers for the third quarter. Usually, you guys in the past were implying a little more of a cyclical bump there, are you still have that in your guidance?

[David Hagan:]

Is all advertising in Q4 with the cyclical bump?

[Donna Jaegers:]

Yes.

[David Hagan:]

Yes. We do expect Q4 to be significantly stronger than Q3 as it's typical in the advertising market.

[Operator:]

Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.