The SK Telecom venture formerly known as Helio is preparing for a closure in the third quarter of this year. After a run from 2006 to 2008, the MVNO network finally realized that 2 year contracts at $100 per month for unlimited service is not in the budget of the youth market. While the Buddy Beacon and YouTube support were nice novelties, monthly fees and carrier contracts have proven ineffective in the youth segment as was the fate for Amp Mobile before it. While the fate of Helio has been decided and the only topic of interest for us is the future of the Ocean 2, Virgin Mobile has come out of the deal with a steal. Here is what Virgin’s CEO Dan Schulman had to say about the acquisition of Helio,
This accelerates our ability to offer a full suite of products to our existing base of 5 million customers…We worked hard to put together a transaction that benefits all those involved, and we are delighted to gain an important strategic partner in SK Telecom, one of the premier telecom companies in the world. The acquisition of Helio rapidly advances the products we can offer and adds a migration path to our most valuable customers, and let’s us enter the post-paid business…This is a natural evolution of our product strategy and builds upon our expansion of hybrid and prepaid services. We intend to integrate Helio’s functionality into our new handsets, support prepaid, postpaid and hybrid services, and we’ll have a greatly improved capital structure and substantially more liquidity.
The deal between Virgin Mobile and Helio adds 170,000 customers to Virgin Mobile with an inventory of 80,000 handsets and generating $80 of ARPU. The big bonus is that they also pick up Helio’s technology which would have cost Virgin over $25 million and 12 months to build on their own. Saving a year in the technology game is priceless even at the expense of Virgin Mobile increasing their revolving debt from $75 million to $135 to make the deal.
The last order of business in the Virgin Mobile takeover are the Helio Employees which currently tally in at 570, but are expected to decrease to just under 370 employees by the end of the third quarter 2008. While we will miss our favorite MVNO network, we hope that other companies looking to join the game decide to take notes from the recent downfalls of Amp Mobile and Helio.
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