Virgin Mobile USA Inc. is buying Helio
Virgin Mobile USA Inc. is buying Helio LLC, a struggling cell phone carrier that was founded to bring the advanced features of South Korean phones to the U.S. market.
Virgin Mobile said Friday it would pay $39 million in stock for Helio, which has 170,000 subscribers, down from nearly 200,000 at the beginning of the year.
At the same time, British billionaire Richard Branson’s Virgin Group and SK Telecom, the South Korean carrier that is the majority owner of Helio, will each invest $25 million in Virgin Mobile. That will give SK Telecom a 17 percent stake in Virgin Mobile.
Virgin Mobile indicated that it will keep operating Helio’s advanced data services and its contract-based service plans. Virgin Mobile’s own plans are prepaid and lack contracts.
But the Helio brand will likely be phased out, said Dan Schulman, Virgin Mobile’s chief executive. It might be kept in the Korean-American market, where Helio is popular, he said on a conference call.
Before the acquisition closes in the next few months, Helio will be cutting costs, Schulman said. Helio had five company-owned stores and 50 company-owned kiosks and has already begun shutting them down.
The long-rumored deal is a poor payoff for Helio’s founders. The company was launched in May 2006 as a joint venture of Internet service provider EarthLink Inc. and SK Telecom.
