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Virgin Mobile, IBM enter IT service agreement (USA)

July 8th, 2008
2:59 pm

Virgin Mobile USA LP has agreed to hire International Business Machines Corp. to handle information technology operations and develop new applications.

Under the Friday agreement, New York-based IBM will hire 44 Virgin Mobile employees at current pay levels for two years.

The companies expect a five-year initial term for the agreement, from May 15, 2008, according to a Monday filing with the Securities and Exchange Commission. New Jersey-based Virgin Mobile can extend the agreement, which also includes engineering services, for one year. The agreement will provide undisclosed IT-related operational cost savings and help the company compete in new product and service delivery, according to a release.

Virgin Mobile will pay IBM through fixed and variable charges, the latter of which will change depending on Virgin Mobile’s need for services. Fees for operations and infrastructure will depend on factors such as the number of servers or workstations needed, the filing said. Network operations center, application development and certain other fees will be hourly. Charges will be adjusted beginning in 2010 based on general economic indicators.

Financial terms of the agreement are not being released.

Virgin Mobile can cancel the agreement with 180 days’ notice plus a fee and deferred transition costs. It may also have to pay wind-down charges for canceling third-party agreements, ending leases or firing employees. The charges wouldn’t apply if IBM didn’t meet certain service levels or violated the agreement.

If either party ended the agreement, Virgin Mobile could ask IBM to provide continuing services for one year to 15 months.

Virgin Mobile plans to file the agreement with the SEC in conjunction with its second-quarter financial report.

On June 27 , Virgin Mobile agreed to buy Helio for about $39 million in equity.

United Kingdom-based Virgin Group and Sprint Corp., the predecessor of Overland Park-based Sprint Nextel Corp, each invested as much as $150 million in mid-2002 to form Virgin Mobile.

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Mobile, USA, Virgin Mobile, UK, Sprint Nextel, Helio, IBM
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Virgin Mobile USA has bought Helio for $39 million, reels in 170,000 customers (USA)

July 1st, 2008
2:46 pm

Virgin Mobile said Friday that it will pay $39 million in stock for mobile phone carrier Helio, which has 170,000 subscribers.

Moreover, Virgin Group and SK Telecom, the South Korean carrier that is majority owner of Helio, will each invest $25 million in Virgin Mobile. That will give SK Telecom a 17% stake in the mobile phone company.

Virgin Mobile said it will continue Helio’s advanced data services and its customer-service plans.

However, critics say Virgin Mobile reported net customer additions fell 94% during the first quarter. The mobile company continues to be hard hit by the economic downturn. Helio has struggled to turn a profit and increase its own customer base. Its phones - a strong suit of the company - have lagged behind rivals such as Apple Inc’s iPhone.

At the end of March, Virgin Mobile had 5.1 million customers, making it one of the largest mobile network operators in the US.

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Mobile, USA, Virgin Mobile, Apple, Helio
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Virgin Mobile’s “totally unlimited” deal (USA)

June 27th, 2008
2:40 pm

I have no experience with Virgin. I’ve never tried Virgin. I don’t know of anyone, personally, who uses Virgin. (heck, I don’t even like virgin daquiris or daquiris for that matter… but I digress)

I thought I’d put this offer out there for those of you looking for cell phone deals. Everyone out there has an unlimited plan offer out there, it seems. Now Virgin’s throwing its hat into the ring, too.

Virgin Mobile USA will unveil its new “Totally Unlimited” calling plan for $79.99 on July 1, the lowest priced and first unlimited nationwide calling plan without roaming charges or an annual contract that can be purchased by cash or credit. Bob Stohrer, chief marketing officer of Virgin Mobile USA, said, “It is simply not necessary to sign a two-year contract to get real worth with your wireless plan. This offer surpasses the regional carriers unlimited calling plans as well, as most addd on roaming charges that can cost customers as much as 79 cents per minute.”

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Virgin Mobile USA to buy SK Telecom’s U.S. unit

June 25th, 2008
2:55 pm

Virgin Mobile USA is set to acquire a U.S. mobile arm of South Korea’s SK Telecom Co as both sides agreed to combine their struggling businesses, the Financial Times reported on Wednesday.

A deal was agreed in principle and an announcement could be made as early as this week, a person with knowledge of the matter was quoted as saying. SK Telecom declined to comment.

SK Telecom, South Korea’s top mobile operator, said in May it was in preliminary talks with Virgin Mobile about strategic opportunities for its Helio U.S. arm.

Helio, which has been losing money, is 69 percent owned by SK, with EarthLink Inc holding 28 percent.

“Although there’s no guarantee that the combined company will succeed, it’s still a good move as SK Telecom can reduce risks from the U.S. business,” said Lee Shi-hoon, an analyst at Hyundai Securities. “Virgin Mobile has a scale and Helio has strong services, so the combination can work.”

The FT said the agreement would see Helio injected into Virgin Mobile USA and the Virgin brand will be retained.

SK Telecom has also agreed to invest a nominal sum in Virgin Mobile USA, the newspaper said.

Virgin Mobile, which is partly owned by Richard Branson’s Virgin VA.UL and Sprint Nextel Corp (S.N: Quote, Profile, Research), serves more than 5 million customers. It has seen growth slowing amid the U.S. economic slowdown and increased competition from rivals.

A merger between Virgin and Helio could make sense as both target young customers and rent space on Sprint’s network.

SK Telecom has looked to overseas markets such as China and the United States as expansion becomes more difficult at home where more than 90 percent of Koreans own a mobile phone.

In China, SK Telecom agreed on Monday with Shanghai Media Group, China’s second-largest media group by revenue, to cooperate in mobile TV, Internet and content businesses.

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Virgin Mobile USA Offers Unlimited Wireless Plan

June 25th, 2008
2:50 pm

Virgin Mobile USA made a move Tuesday to undercut other mobile providers offering unlimited rate plans. Mobile providers like T-Mobile and Sprint are currently offering customers an unlimited rate plan, with about $100 being the price customers can expect. Virgin Mobile USA cuts the price by $20 — except for customers who also want unlimited text and messaging, with texting, IM, email and picture messages, who will have to pony up another $10.
The plan, called Totally Unlimited, is billed by Virgin Mobile as the “lowest priced and first unlimited nationwide calling plan.” Users on the plan are not subject to roaming and are not necessarily tied to a two-year commitment.

Totally Unlimited gives users who purchase the plan the option to pay with credit or debit cards and not necessarily sign a long-term contract. Avoiding getting locked into a long-term contract may be an option that appeals to a large number of users fed up with their current mobile carrier and looking to make a switch.

The Totally Unlimited plan is another option mobile plan that Virgin Mobile is offering customers. The unlimited plan joins a Pay As You Go and Monthly model that Virgin debuted earlier in 2008.

The by from Virgin comes several months after other nationwide carries rolled out unlimited use rate plans to their customers. Sprint’s Simply Everything plan costs customers $99.99. An one line, unlimited plan from Verizon Wireless also starts at $99, but runs all the way up to $139, depending on what type of unlimited service a customer wants. T-Mobile’s offering also comes in at $99.

Whether or not mobile customers will move to Virgin Mobile remains to be seen. But a less expensive price point and the option to change carrier at any time will likely attract a fair number of mobile subscribers.

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Virgin Mobile USA to acquire Helio (USA)

June 25th, 2008
2:00 pm

After months of speculation, Virgin Mobile USA has said it is to acquire the Helio, the US MVNO controlled by SK Telecom of South Korea. The idea is that their combined force will bring economies of scale to aid their struggling businesses.

According to the Financial Times, Virgin Mobile USA last month reported net income of €3 million (US$4.8 million) for the first quarter of the year, down 75% on the same period last year. It also said it expects to lose between 130,000 and 160,000 subscribers in the second quarter.

Unusually in the US, all of Virgin Mobile’s 5.1 million customers are all pay-as-you-go whereas the norm is to tie customers into long contracts which are more profitable and predictable for operators. Helio brings almost 200,000 customers to the party, all of whom are on monthly contracts. The obvious thing for Virgin to do is build on this base and increase the number of contract customers.

While the merger won’t be anything like the scale of the Sprint’s buying Nextel back in 2005 for €22.47 billion (US$35 billion), the issues are the same. The failure to integrate the two businesses successfully, and thereby benefit from the economies of scale, are widely blamed for the dire straits Sprint is in. Appalling customer service in the interim has lead to it churning customers at staggering rate, losing 1.1 post paid subscribers in the first quarter of this year.

In addition, unlike in Europe, there are fundamental questions about whether the MVNO business model can work in the US – after all, even the mighty Disney pulled out after a few months.

On the plus side, the new entity will be known as Virgin, a strong brand by any standards, and SK Telecom will own about 20% of the merged business, which is thought to be worth about €32 million (US$50 million).

Wireless Mobile Telecom Wireless News

Mobile, USA, Virgin Mobile, SK Telecom, Helio
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Virgin Mobile joins Sprint, T-Mobile and others in wireless unlimited party (USA)

June 24th, 2008
2:43 pm

Virgin Mobile, the offspring sprung from Sprint and sent off on its own into the wireless world, isn’t showing much respect for its parent.

Well that’s one way to look at Virgin’s brand new “Totally Everything” unlimited calling plans for $79.99 a month. An extra $10 a month adds unlimited text messaging.

Hmmm. That sounds familiar. Oh yeah, Sprint has a “Simply Everything” unlimited calling and messaging plan for…$89.99. Sprint, of course, also has a much more expansive flagship unlimited plan for $99.99 a month that lets a subscriber enjoy “Everything your phone, PDA or smartphone can do nationwide — text, surf, email, listen, watch, find and, of course, talk — on one simple plan.”

Adam Fendelman at About.com noticed the similarities. “What’s perhaps most interesting is that Virgin Mobile, which itself is a reseller of Sprint mobile service, is even undercutting Sprint,” he wrote.

So what drove Virgin to make this move?

“Unlimited is the buzzword in the wireless world right now,”
Bob Stohrer, chief marketing officer at Virgin Mobile, said in this Marketwatch report. “We think that the plan and the value on its own will resonate with consumers. As importantly, we think it provides an important halo for all of our products.”

The carrier that began as a joint venture between Sprint and Richard Branson’s Virgin Group announced today that starting July 1 it would join the wireless industry’s unlimited party. Virgin sells its own brand of service over Sprint’s network, contributing more than 5 million wholesale subscribes to Sprint’s overall customer count.

Sprint is betting big that its expansive and relatively fast “now network” will make it stand out from rivals and return it to a growth track. The newly launched Samsung Instinct phones are whizzes at navigating the ‘Net, watching TV, listening to music and doing other data-oriented functions.

In an effort to avoid any nasty, or at least annoyingly surprising, extra charges on a subscriber’s monthly bill, Sprint is requiring that Instinct purchasers also sign up for one of its Simply Everything unlimited or other data plans.

All the calls, all the data, all the Simply Everything for one don’t-worry-about-any-extra-charges price.

Verizon Wireless, T-Mobile and other carriers also have unlimited calling plans, though most of them charge extra for data services.

It will be interesting to see whether this unlimited gambit brings a much-needed surge for Virgin. The carrier primarily reaches out to the youth market, relying primarily at least in the past on its no-contract prepaid services.

Some wireless analysts see this new plan as possible competition on the edges for Sprint, though others see it hitting a carrier such as T-Mobile more directly.

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Virgin Mobile Unveils the “vTrendy” (India)

June 23rd, 2008
2:45 pm

Virgin Mobile has announced its “vTrendy” phone, a sleek, color-screen FM Radio-enabled phone claimed to be one of a kind in bundling a unique offer at such an affordable price.

At around 65gms, the “vTrendy” appears sleek and comes with a 65K color screen, speaker phone, organizer, FM radio, stereo headset, up to 500 contacts phone-book memory, up to 150 additional contacts on RUIM or SIM card, and Long Messaging Service (LMS). As a value-add, the phone offers access to Virgin Mobile’s VAS data portal aka ‘Vbytes’ wherein users can get unlimited to Virgin Mobile select content and other applications for just Rs 5 per day.

Announcing the launch of the “vTrendy”, P Madhavan, chief sales and distribution officer of Virgin Mobile, said, “Youth today are faced with a situation where they have no stylish CDMA handsets in the price range below Rs 1,500. Even a GSM service provider’s handset bundled offer does not really appeal to them because of lack of attractive handsets. vTrendy is a no compromise deal for youth since it combines a stylish handset to suit their budget, is loaded with features such as FM Radio, 65K color, and Long Messaging Service (LMS), and is bundled with an offer tailored just for them.”

The “vTrendy” is attractively priced at Rs 1,499. With every “vTrendy” users will also get a starter user kit and a lifetime validity recharge. The handset is now available across 15,000 outlets nationally and 1,000 modern retail outlets including The Mobile Store, Univercell, Croma, Convergem, Big C, Vishal Mega Mart, Vijay Sales, and Sangeetha, among others. Virgin Mobile will also make the handset available across 34 kiosks at malls across the country.

For additional information on the “vTrendy”, Virgin Mobile champs can be reached on the toll-free number 1-800-209-4444 from any BSNL or MTNL landline or on 125999 from any Virgin Mobile phone.

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Helio Merger Talks Confirmed

May 16th, 2008
1:11 pm

Mobile service reseller Virgin Mobile USA on Wednesday confirmed reports that it is in talks with South Korea’s SK Telecom about a strategic deal involving Helio, SK’s high-end U.S. mobile service reseller.

The parties are seeking a deal that could alter the fortunes of both Virgin Mobile and Helio, two firms that have faced tough times financially in the disappointing mobile virtual network operator, or MVNO, business.

Confirmation of the talks between SK Telecom and Virgin Mobile about a possible merger of the two MVNOs sent Virgin Mobile’s stock soaring more than 20 percent.

Both Helio and Virgin are jointly owned by SK Telecom and EarthLink. Virgin Mobile, which resells services from Sprint Nextel, went public in May 2007.

Virgin Mobile targets pre-paid phone service customers with relatively inexpensive service plans, while Helio aims at the youth market with more expensive services and high-end phones.

“Helio and Virgin Mobile make a very bad match,” said Alex Besen, president of The Besen Group. “Certainly a merger does not make sense either financially or operationally for either company, but particularly so for Virgin.”

The main goal of a merger of the two firms, he said, would involve the migration of many of Virgin’s five million customers to post-paid plans and would offer them enhanced services marketed by Helio.

Kajeet is a Bethesda, Maryland, MVNO, which began reselling Sprint mobile services in March 2007 aimed at “tweens,” young people between 12 and 14 years old.

Mr. Besen believes that Virgin, which has had problems adding new subscribers, should target attractive, rapidly growing cultural niches in the U.S. market such as Hispanics.

He said that Virgin, which woos Hispanics, should have at least investigated the purchase of Movida Communications, a Kansas City, Missouri-based MVNO which targets the U.S. Hispanic market.

Movida, which was backed by Sprint a Venezuelan conglomerate and a group of former Sprint executives, filed for Chapter 11 bankruptcy in March.

Cozac Wireless, a subsidiary of APC Wireless of Rockville, Maryland, bought Movida for $2.8 million in April.

“Virgin will not get the benefits of scale with Helio that it will get from Kajeet, Movida or some of the other players targeting cost-conscious consumers,” Mr. Besen said.

Topics: Earthlink, Virgin Mobile, Sk Telecom, MVNO, Sprint Nextel, Movida, Cassimir Medford, Alex Besen, Kajeet, Cozac Wireless.

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Virgin Mobile, Helio Merger Talks Sign Of Tough Wireless Market

May 15th, 2008
2:54 pm

Three years ago, everyone from Mickey Mouse to Sean “P. Diddy” Combs said they wanted to get into the business of reselling wireless service.

Nowadays, those resellers left should consider themselves lucky to still be operating.

The latest signal of the trying times is the potential merger between Virgin Mobile USA Inc. (VM) and SK Telecom Co.’s (SKM) Helio. While they are in early talks, a deal would combine their complementary youth focus and improve their prospects of survival. It is an illustration of the pressures they face and the need for wireless resellers to either shutter their business or consolidate.

“The (wireless reseller) market in this country can be summed in one word: disaster,” said Eddie Hold, an analyst at Current Analysis. “It’s been a complete and utter failure.”

The wireless resellers - who lease time from cellphone carriers - went after niche segments, such as youths, sports fanatics or Hispanics. The hope was to use an existing brand such as Walt Disney Co. (DIS) or its ESPN unit to push the service. But too many competitors, unclear business strategies and an inadequate retail presence sealed the fate of many players early in the game.

There are roughly 13 million customers who use a wireless reseller, according to Roger Entner, head of the communications practice at IAG Research. Over the next two years, he expects the number to grow to 15 million to 17 million. A few years ago, he had projected 25 million users by 2010. The estimate, however, assumed several key players would remain in business.

Helio and Virgin Mobile confirmed on Wednesday that they were in talks over a potential deal, although they declined to specify further. A combination would bring together Virgin Mobile’s lower-end prepaid youth market with Helio’s limited higher-end contract customers.

Both companies have experienced their share of problems. Last week, Virgin Mobile said it had added nearly 18,000 net new customers in the first quarter, a dramatic drop from the 310,000 customers it signed up in the first quarter a year ago. Its revenue fell 3.7% to $326.8 million, while net income plunged 75% as the company faces intense competition in the prepaid market.

Helio spokesman Rick Heineman said the company continues to boast attractive metrics, such as the high average revenue per customer it garners. The company has roughly 200,000 subscribers, but Heineman declined to comment on whether customer growth was slowing or accelerating. Helio isn’t profitable, and Heineman would not speculate as to when the business would turn a profit.

Late last year, EarthLink Inc. (ELNK) reduced its stake in the Helio joint venture, ceding control to SK Telecom after disappointingly nabbing only a small customer base. In January, Helio founder Sky Dayton stepped down as CEO. A spokesman for Helio wasn’t immediately available for comment.

The two have lasted much longer than their similarly ambitious peers.

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