Fon

Growth at Fon has accelerated so much that we reached one million community members and close to 300K lit routers (this is ten times more routers than T Mobile has on a worldwide basis). Yes, it is true that a lot of the growth from Fon is now coming from operator deals, especially from BTFon, but that is also great news, because Fon is proving that we can work with telecom operators. Fon is showing fixed operators that by adding our shared wifi functionality with their broadband customers they have less churn, a lower cost of customer acquisition and a higher ARPU. We are also beginning to show some wireless operators that, as laptops get smaller and phones get bigger, mobile devices become data hogs and that WiFi is a great complement to 3G. The iPhone, which even though is sold as a 3G device forces you to use WiFi to get downloads from iTunes, is another proof of concept.

Sales of routers and day passes keep growing as we reduce losses. Last year we were loosing more then a million euros per month and this “burn rate” has shrunk to around 300K per month this summer. Our goal of reaching break even by the end of 09, which seemed so distant last summer, now looks within site. And the fundamentals are with us. When we started Fon, back in 2006, 200 million WiFi chips were sold. The number of chips sold this year is expected to reach 1 billion.

And more telecom operator deals are in the pipeline. In July we started Fon in Portugal in partnership with the largest cable operator in that country called Zon. Together we created Zon@Fon to serve their 1.5 million customers plus everyone else in Portugal who would like to enter the network. Next month we will launch Fon in Russia together with Sistema, the largest fixed and mobile operator in the country, and we have 8 such deals in negotiations. Top countries for Fon are the UK, Japan and France. Japan in particular is the country where we sell the most routers. These countries are also some of the three most technologically advanced large countries in the world. To me this means that others will follow.

Regarding our employees, we now have a more international team, reflecting the fact that Spain is less than 10% of our market. I take this opportunity to congratulate the people working at Fon for the great results achieved. Even if the company is not profitable yet, our goal gets closer every day and I personally put my time, money and heart in Fon. I also want to thank our investors at BT, Google, eBay, Index and others. I also thank all Foneros around the world as without their enthusiasm Fon, the largest WiFi network in the world would not exist.

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Follow Martin Varsavsky on Twitter: twitter.com/martinvars

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