Virgin Mobile USA to take over Helio
By Will Park on Wednesday, June 25th, 2008 at 1:41 AM PST In Financial, Helio, Partnerships, Rumors, Virgin Mobile
While no official announcement has yet been made, the Financial Times is reporting that a source close to the situation has indicated that a tentative agreement has been struck between Virgin Mobile USA (NYSE: VM) and Helio. The deal would have Helio essentially being absorbed within Virgin Mobile USA’s larger wireless network.
Virgin Mobile USA and Helio have been struggling to make a larger 
impression in the US wireless market. Since going public last year, Virgin Mobile has seen it’s shares drop over 75% - once worth upwards of $15, Virgin Mobile USA’s stock is now trading at record lows. With financials shrouded in scandal, the joint venture between Sprint (NYSE: S) and Virgin Group lays claim to over 5 million wireless subscribers, firmly placing Virgin Mobile USA ahead of Helio’s fledgling network.
Helio’s subscriber-counts were hovering around 200,000 this past January, and the company has been struggling to find profit in a tough wireless landscape. Burning cash infused from parent companies SK Telecom (NYSE: SKM) and Earthlink, Helio’s been spending without a care in the world. SK Telecom recently took control over Helio with an over the top cash infusion that netted SK Telecom a majority stake in the joint venture. Unfortunately, as these situations usually go, Helio has failed to reach the light at the end of the tunnel.
The two companies kicked off negotiations regarding a possible merger/buy-out just last month, and now it seems there will indeed be a deal. SK Telecom will reportedly be absorbing Helio’s entire outfit in to Virgin Mobile USA’s more recognizable brand. The move makes sense in light of Helio’s plan to close most of its retail stores throughout the nation.
Having only boasted 200,000 subscribers, Helio’s main contribution to Virgin Mobile’s US operations won’t be the addition of subscribers, but rather their experience in the more lucrative post-paid wireless market.
Virgin Mobile USA is said to be prepared to issue payment in the form of equity shares in the larger Virgin Mobile USA. SK Telecom will reportedly secure about a 20% stake in Virgin Mobile USA, worth about $50 million. With luck the consolidation of the two US MVNOs will help boost Virgin Mobile USA high enough to really start flying in the US wireless market. But, with increased pressure from industry incumbents like Sprint, Verizon (NYSE: VZ), AT&T (NYSE: T), and T-Mobile, Virgin Mobile is going to have a long road ahead of them.
Helio won’t be known as the last true MVNO to be kicked out of the US wireless market - they’ll be bowing out with at least a modicum of grace.
Does anyone know if the merger will allow me out of my contract with Helio and the ETF?
Thanks for the TOS help!
That’s a really good question. I would assume so.
Just got a merger announcement from Helio saying this:
“Q: Does this affect my current contract with HELIO in any way? When Virgin Mobile USA does acquire HELIO, can I end my current contract without paying an early termination fee (ETF)?
A: HELIO contracts remain in effect and unchanged by this transaction. HELIO members who wish to end their contract early will still be subject to an early termination fee (ETF).”
Well, that sucks… Sorry man, looks like ur stuck…
Confirmed. ETF will still be in place.
I don’t like the Virgin Mobile logo. VM phone line-up is nowhere near that of Helio, in terms of the tech, style, and etc. Why should Helio wear that cheap VM image?
ok Virgin Mobile does not have good phones in the U.S. but this will all change with the addition of Helio. Be prepaired to see virgin mobile making a huge come back and start competing with T-mobile. Ps. virgin has the new ocean 2 and just look at phones from their sister companies accrost the sea.