Virgin Mobile USA is in talks with SK Telecom over a possible deal involving Helio, the U.S. mobile operator that gears itself toward affluent youngsters but has struggled to make a profit since its launch.
The talks, which could potentially lead to an acquisition or an investment, are in the early stages, and Virgin said Wednesday that it didn’t expect to comment further unless an agreement is reached.
Helio was founded by SK Telecom and EarthLink in 2005 and launched the following year. It is known as a mobile virtual network operator (MVNO) because it rents capacity from a third party rather than owning its own network. SK Telecom became the majority owner after EarthLink reduced its ownership to 22 percent last year.
Both SK Telecom and EarthLink have sunk hundreds of millions of dollars into Helio, which continues to post losses despite boasting some of the best customer spending and usage metrics in the mobile industry.
At the end of last year, Helio said its users spent more than US$85 per month, compared with an industry average of $50. Helio customers send an average of 550 text messages per month, and 95 percent of Helio users access the Web from their phones, the company said at the time.
Still, EarthLink expected Helio to report a year-end loss for 2007 of as much as $360 million on revenue of as much as $170 million. That’s after SK Telecom and EarthLink started the company with a combined $440 million. Since then, both companies have made additional investments in Helio.
Virgin Mobile USA’s earnings for the first quarter were down from the same period a year earlier. It had 5.1 million subscribers in the first quarter, compared to Helio’s 200,000 at the end of 2007. Like Helio, Virgin Mobile USA is also an MVNO, and both use Sprint’s network to deliver their service.
The companies have different types of customers, however. While Helio is after big-spending mobile users, Virgin offers only prepaid services and targets people looking for a lower-cost service. Combining the companies could allow the new entity to offer both pre- and post-paid service and attract a wider spectrum of the market.
Helio and Virgin aren’t the only struggling MVNOs. Amp’d, which was also geared toward young mobile users, filed for bankruptcy and then shut down last year. Other MVNOs such as ESPN Mobile and Disney Mobile have suffered similar fates. In addition, Qwest dealt a blow to the concept of MVNOs earlier this month when it decided to stop selling its own branded mobile service, using Sprint’s network, and begin selling service branded by Verizon.
Wireless Mobile Telecom Wireless News
Disney Mobile announced plans to expand its services in coming months, adding a location scout feature enabling handsets to display nearby points of interest as well as a photo-sharing application promising one-click uploads to a Disney photo-sharing site. Per its family-friendly mission statement, the MVNO will allow each family member their own photo page, and enable parents to control their children’s ability to share images beyond immediate relatives. Disney Mobile senior VP/GM George Grobar told TWICE the MVNO is also prepping an online family calendar including automatic push alerts to phones, as well as a new content portal enabling side-loading to Disney handsets. - Jason
For more on Disney Mobile’s plans:
- read this TWICE article
Wireless Mobile Telecom Wireless News
MickeyNews writes…As Disney Mobile L.L.C. approaches its one-year anniversary, the company provided a glimpse of how customers are making use of the innovative, family-centric applications at the heart of its service. The mobile virtual network operator also proffered a look into its plans for the future.
According to George Grobar, general manager of Disney Mobile, 30 percent of the MVNO’s subscribers make use of its GPS location tracking services, and parents who do so use the feature 14 times per month on average—or roughly every other day. The service allows parents to keep tabs on their children.
Grobar also offered some additional Disney stats:
Thirty percent of Disney Mobile’s location requests are made from the Web and 70 percent from the handset, demonstrating the cross-platform nature of the application.
Fifty-six percent of Disney Mobile subscribers are adults and 44 percent are children.
Twenty-three percent of kids using the service are on the child “starter” plan, which offers 200 anytime minutes for $25 per month.
More than 65 percent of its subscribers use the Family Alert prioritized text messaging feature.
As for the MVNO’s plans for the future, it is developing a new photo application that will allow users to upload photos to a family photo page with one click. Each family member will have a page, as well as a shared page for the whole family. That feature also will include parental controls on whether children can share their photos.
A family-centric calendar with a mobile alert feature is in the works as well, Grobar said.
Disney Mobile is also eying 3G. The MVNO’s service was and is still using handsets that are only able to access data through Sprint Nextel Corp.’s CMA 1x network, which limits the use of high-bandwidth applications or content. Disney Mobile is likely to add EV-DO-capable handsets to its lineup within the next six to 12 months, Grobar said.
Wireless Mobile Telecom
Virgin USA in Talks Over Mobile Operator Helio
