Virgin Mobile USA buys 200,000 users
According to the Financial Times Virgin Mobile USA is set to buy Helio, the US mobile business of South Korean Communications company SK Telecom.
The 200,000 pay monthly customers with Helio will be merged into Virgin’s 5.1 million Pay as You Go Customers and the Helio brand dissolved.
SK Telecom will also invest a nominal sum into Virgin Mobile USA in return Virgin will “issue new shares, leaving SK Telecom holding close to 20 per cent of the equity of the enlarged business, worth about $50m.”
Both companies have been going through a hard time in the US market. Shares in Virgin Mobile USA have fallen by 75 per cent since listing, while Helio has also struggled to build it customer base since its conception in 2006.
The Financial Times concludes that “despite the comparatively small nature of the deal, the combination of Virgin Mobile USA and Helio is expected to deliver tangible benefits. The enlarged Virgin Mobile USA will be able to expand into the more lucrative market of monthly contracts and to renegotiate what it pays to rent wireless capacity on Sprint Nextel’s mobile network.”
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