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 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 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 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, AT&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.