With the recent acquisition of Helio from SK Telecom and Earthlink, the strength of Virgin Mobile USA continues to move forward in the world of all things MVNO (Mobile Virtual Network Operator). As a leader in national wireless services sans contract, Q2 2008 proved to be a centered around the success of their ‘Totally Unlimited’ calling plan and new data offerings.
The success of our newly introduced voice and data plans has driven substantial increases in higher ARPU gross customer additions in the second quarter. The recent launch of our ‘Totally Unlimited’ calling plan for $79.99 provides our customers with one of the most compelling offers on the market and is quickly becoming a clear differentiator for Virgin Mobile USA. Sales of the new unlimited plan are exceeding our expectations, and at current usage levels, they are among our most profitable. We believe these factors will result in an improvement to ARPU trends going forward and reinforce our confidence in our 2008 estimates.”
The big numbers worth noting in their press release are that they currently operate with $29.2 million of free cash flow (the most ever) and they had a Net Income (NI) of $8.3 million dollars. At this point the low fixed-cost model seems to be working well for the last in a dying breed of MVNO networks here in the US, but that is all about to change now that they have added the post-paid subscribers from Helio.
The acquisition of Helio offers an excellent opportunity to expand our addressable market into postpaid and significantly increase the value we can provide our customers through new data services and feature-rich handsets. The additional liquidity and improved capital structure anticipated from the deal will benefit our business financially and strategically, and we are looking forward to the closing of the transaction in the third quarter.”
