Virgin Mobile Acquires Helio
June 27, 2008
- Digital and Mobile
By Antony Bruno, Denver
It's official, Virgin Mobile USA is acquiring rival mobile operator Helio in a deal valued at $39 million. Helio is jointly owned by Korean carrier SK Telecom and the U.S.-based ISP EarthLink.
Both Virgin and Helio are mobile virtual network operators (MVNO) meaning they don't own and operate their own wireless network, but rather lease airtime from operators like Sprint. Helio took a heavy content-and-services approach to acquiring subscribers - focusing on things like mobile social networking, wireless music and video sales, and an innovative program of letting users recommend and even buy content for other Helio users.
While those efforts showed promise, and the company won praise from industry analysts for its slick technology and phones, subscribers remained elusive. According to the release announcing the acquisition, Helio has only 170,000 subscribers. At least 1 million subscribers is needed for a network operator to be self-sustaining.
Virgin Mobile remains the only U.S.-based MVNO to have any success. It has over 5 million customers, most of who are on the company's signature pay-as-you-go plan. It also has proven adept at selling content to its youth-skewing base.
As part of the deal, Virgin parent company Virgin Group and SK Telecom will both invest $25 million into the new Virgin Mobile, which among other things will lead to SK Telecom holding a 17% stake in Virgin Mobile.
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