Virgin Mobile Officially Buys Helio For $39 Million - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Government // Mobile & Wireless
01:24 PM

Virgin Mobile Officially Buys Helio For $39 Million

Helio has approximately 170,000 subscribers on one-year or two-year contracts who will be absorbed into Virgin Mobile's existing 5.1 million prepaid customer base.

Virgin Mobile USA will buy mobile virtual operator Helio for $39 million in stock, the company said Friday.

The company said the acquisition will allow it to enter the more lucrative field of monthly contracts, cut operation costs, and reduce the amount it pays to purchase wireless capacity from Sprint Nextel.

As part of the deal, Virgin Group, which owns Virgin Mobile USA, and SK Telecom, the majority stakeholder in Helio, will each invest $25 million in the combined company.

"We believe that the acquisition of Helio and the related strategic investments by SK Telecom and Virgin Group are of enormous benefits to our business, both financially and strategically," said Dan Schulman, CEO of Virgin Mobile USA, in a statement. "It provides us with a firm foundation to create a truly holistic, leading-edge product suite to service all of our existing and prospective customers."

Helio has approximately 170,000 subscribers on one-year or two-year contracts who will be absorbed into Virgin Mobile's existing 5.1 million prepaid customer base. It should be a smooth transition, as both companies use Sprint's network to deliver service.

Both companies target a younger demographic, but the companies go for a different ends of the spectrum. With its prepaid services, Virgin Mobile targets customers who have little or no credit, or customers who don't want a contract. Most phones from Virgin Mobile can be purchased for $30 or less.

By contrast, Helio targets users who want data-heavy services like YouTube and Google Maps on sophisticated handsets like the Ocean. Its customers spent $80 a month on average for services, one of the highest averages in the industry.

Additionally, Virgin Mobile said it can cut costs by combining the companies. These saving will come mainly from reducing head count and streamlining operations.

The move also gives Virgin Mobile extra negotiating power with Sprint. The company said it already has renegotiated its contract with Sprint and expects to receive a minimum of an 8% reduction in the cost per minute in 2009.

Word of the deal leaked earlier this week, and the acquisition is expected to close in the third quarter of 2008. Helio is the latest mobile virtual network operator that's failed in the U.S. market, joining the likes of ESPN Mobile, Amp'd, Voce, and Disney Mobile.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
InformationWeek Is Getting an Upgrade!

Find out more about our plans to improve the look, functionality, and performance of the InformationWeek site in the coming months.

Pandemic Responses Make Room for More Data Opportunities
Jessica Davis, Senior Editor, Enterprise Apps,  5/4/2021
10 Things Your Artificial Intelligence Initiative Needs to Succeed
Lisa Morgan, Freelance Writer,  4/20/2021
Transformation, Disruption, and Gender Diversity in Tech
Joao-Pierre S. Ruth, Senior Writer,  5/6/2021
White Papers
Register for InformationWeek Newsletters
Current Issue
Planning Your Digital Transformation Roadmap
Download this report to learn about the latest technologies and best practices or ensuring a successful transition from outdated business transformation tactics.
Flash Poll