Sprint Snags 5 Million More Customers In Virgin Acquisition - InformationWeek
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7/28/2009
10:05 AM
Eric Ogren
Eric Ogren
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Sprint Snags 5 Million More Customers In Virgin Acquisition

Today Sprint announced its intent to acquire mobile virtual network operator Virgin Mobile USA. The deal, valued at $483 million, will bolster Sprint's subscriber count by about five million pre-paid users.

Today Sprint announced its intent to acquire mobile virtual network operator Virgin Mobile USA. The deal, valued at $483 million, will bolster Sprint's subscriber count by about five million pre-paid users.Sprint ranks a distant third behind larger competitors AT&T and Verizon Wireless. The last couple of years have seen stagnant growth of its wireless subscribers, with some defecting to other carriers. Looking for ways to increase its subscriber counts, Sprint decided to take the acquisition route.

Virgin Mobile USA already uses Sprint's cellular network to provide its own services, so there are built-in synergies with the acquisition. Virgin Mobile actually beefed up its own business in 2008, when it acquired post-paid wireless provider Helio. At the time, Virgin was looking to expands its customer base. Helio also used Sprint's network.

According to Sprint, the Virgin Mobile brand will be licensed from the Virgin group and it will continue to sell Virgin Mobile services right next to its Boost Mobile pre-paid service.

Sprint CEO Dan Hesse said in a prepared statement, "The acquisition of Virgin Mobile USA positions Sprint for even greater success in the prepaid wireless segment. Prepaid is growing at an unprecedented rate with consumers keenly focused on value. Virgin Mobile is an iconic brand in the marketplace that will complement our Boost Mobile brand."

What's not clear is how Virgin Mobile's post-paid services will be marketed. It seems a moot business to pursue, since customers can simply sign up for Sprint-branded post-paid services instead. The former Helio offering had its own style and services. Will Sprint continue to operate them?

The deal is expected to close at the tail end of 2009 or early 2010.

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