Virgin Mobile USA Buys Helio, Enters PostPaid Market
With a $39 million dollar buyout offer accepted by SK Telecom Virgin Mobile this week instantaneously became the only “big player” in the MNVO market, a sector of the wireless telecom industry that has watched big players such as Amp’d Mobile, and critically lauded prepaid operators such as Disney Mobile exit the market after filing for bankruptcy this year and in Disney’s casing stunning investors by simply choosing to dissolve the company.
It doesn’t surprise me that Virgin Mobile USA made the move, especially given their aggressive moves in the market over the last 6-12 months, what does surprise me is that Virgin Mobile has not only acquired the companies 177,000 customers, but will continue to offer PostPaid plans.
I’m pretty sure this is partly do to the $25 Million dollars SK Telecom will invest in the newly formed Virgin Mobile company, and the two seats they will hold on the board. But more importantly it’s not suprising considering Virgin Mobile has been eyeing the PostPaid U.S. market for a while now, the new acquisition according to Virgin Mobile reps will save them about 12 months in programming.
But whats the biggest benefit of the merger? Both companies which run on the Sprint Wireless network will pay lower operator fees thanks to the discounts they will receive for the increase in the singular companies customer base.
For Helio customers the move means job losses, although that hasn’t been fully confirmed, and the closing of Helio retail locations. The move will also hand over nearly $17 million worth of Helio handsets to Virgin Mobile, and will force Helio to cut down on operating expenses and debt before the deal is finalize in Q4 2008.
Perhaps this is finally a signal that the MVNO market is headed in an upward motion with bigger players who can sustain growth while grappling with new technology demands and a further reach to their customers at lower operating expenses thanks to the discounted fees the company will receive from Sprint Wireless.
This entry was posted on Sunday, June 29th, 2008 at 12:06 pm and is filed under Virgin Mobile. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
