14 DAY TRIAL // Virgin Mobile, probably the best-known mobile virtual network operator (MVNO) in the world, announced that it would buy Helio, the American MVNO currently owned by SK Telecom and EarthLink.
The deal will not be completed following a payment in cash, but after SK Telekom and EarthLink are offered 13 million shares of Virgin Mobile USA's stock, shares that have a value of approximately $39 million.
Formed back in 2006 by the South Korean mobile operator SK Telecom and the US Interned provider EarthLink, Helio wanted to offer American users "unusual" mobile phones. The flagship product of Helio, named Helio Ocean, managed to attract quite a lot of customers, but apparently that wasn't enough for Helio to be a successful company on its own.
After the acquisition of Helio is completed, sometime in the third quarter of the year, Virgin Mobile will take over more than 170,000 new customers who are currently Helio's subscribers, as well as 85,000 mobile devices found on Helio's inventory, valuing about $17 million.
Talking about the Helio buyout, Dan Schulman, Chief Executive Officer at Virgin Mobile USA, stated: "We believe that the acquisition of Helio and the related strategic investments by SK Telecom and Virgin Group are of enormous benefit to our business, both financially and strategically. The reduction of our long-term debt and the increase to our revolver will realign our capital structure, providing us with greater liquidity and increased flexibility to grow our business. At the same time, we will acquire an asset, which will add to our scale, allowing us to reduce our network costs and assure that Helio's customers are immediately profitable when brought on to our cost structure. We expect the combined elements of this deal will drive increased Adjusted EBITDA and free cash flow."
All in all, Helio's current users should probably be happy about the news, as Virgin Mobile is known for offering satisfying mobile services.