Helio in the Fire

June 23, 2008

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Helio It appears that the potential merger between Virgin Mobile and SK Telecom’s Helio have fallen apart. Gizmodo is reporting that Helio stores and kiosks will soon start shutting down. The companies have been in discussions since May.

Both companies are MVNOs (Mobile Virtual Network Operators) which is an industry under intense scrutiny with many high profile failures in the last few years (Disney mobile, ESPN Mobile, Voce, Amp’d Mobile, etc). Though profitable, Virgin Mobile does not appear to be willing to take on the huge Helio expenses and debt (Virgin is one of the few MVNO success stories) and possibly dilute its focus on the pre-paid youth market. While it may still be possible for Virgin or someone else to pick up Helio assets, it may be a better strategy to simply wait and attempt to sweep up as many customers as possible after the seemingly inevitable Helio implosion (or pay a fee for each subscriber moved to Virgin).

In 2007, Helio reported a loss of $327 million on just $171 million of revenue. The tight economy and increasingly sophisticated offerings from Apple and AT&T have not helped Helio which has focused on higher end plans and phones.

Written by Todd · Filed Under Mobile