All you really want to know about the Virgin/Helio merger

Virgin Mobile USA finally made the announcement on Friday that they have bought Helio. The joint venture of SK Telecom and EarthLink will be sold to Virgin for $39 million in common stock. SK Telecom will also get two seats on Virgin’s board of directors. Of course, there still remains the issue of what will happen to the service. So let’s go over the salient points.

Virgin goes postpaid

Right along with the deal announcement, Virgin made it clear that they would be entering into the postpaid market as soon as the deal closed. This is thanks to Helio’s proprietary customer management system, which will allow them to handle a postpaid system. The customer management system also provides for hybrid accounts, meaning we could be seeing even more offerings from Virgin once everything is settled. With Helio comes its 170,000 customers, which are said to have an ARPU of $80. Funny, wasn’t there something else with Virgin Mobile that cost $80? Oh yeah, their unlimited calling plan. Maybe we’ll see this available prepaid and postpaid. It would make sense.

Helio’s handsets

Helio has long been known for their killer handsets. The Ocean is touted as some as better than the iPhone, though most Apple fanboys scoff at that notion. Regardless, it’s a pretty device, and it is certainly superior to anything Virgin currently offers. Thankfully, it sounds like Virigin will be keeping the Helio line, keeping the 170,000 transferring customers happy. Plus, they will be an attractive option for existing customers. Many of Helio’s data offerings are also coming along for the ride. This mean an integrated version of YouTube, MySpace, Google Maps, and more.

New MVNO agreement

Before the deal became official, Virgin and Sprint revised their network relationship. Virgin claims that this will mean an 8 percent reduction in cost per minute in 2009, with the rates falling even further over a three-year period. “This new volume discount structure allows Virgin Mobile USA additional flexibility in pricing, while substantially reducing the Company’s third-party risk.” So will they pass the buck to the consumer? One would hope so, considering they put this information right in the press release.

Financial stuff

We cover prepaid phones here, not financial analysis. So we’ll keep this section brief. With this deal comes a $25 million investment in Virgin Mobile from SK Telecom, and an additional $25 million from the Virgin Group. This, according to the release, will increase Virgin’s line of revolving credit, allowing them greater flexibility in spending.

Final call: Looking good

We won’t know what’s going to happen with this deal until it closes, which is said to be in the third quarter. From the looks of it, though, there are some major benefits to the merger, as described above. There are always bad things, though. So, Helio customers, are you satisfied with having your service transferred over to Virgin Mobile?]]>

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  1. Sly on June 30, 2008 at 11:12 am

    Ive been with Helio for two years, and it stinks we couldnt keep afloat on our own. Really though, if we had to be picked up by somebody, im glad its Virgin Mobile. They are into the same hip content and advertising as we were, and they are fans of the keyboarded phones, so I know theyll keep the Ocean line goin. Plus with their distribution in major stores, we’ll be seeing more Helio phones everywhere, not just FYE….i feel like a Pepsi drinker who has to switch to Coke, but not nearly as bad, because it still tastes good in the end-

  2. mel on July 1, 2008 at 3:04 pm

    I’ve been w/ virgin for 1 year and think this is really neat, wanted to see some upgrades in the phones like a helio phone: but knew nothing about helio…i’ve got 3 virgin phones and love the ability to change plans whenever i want online: no need to call in: never any problems: i am a skydiver though so partial to sir Richard and any of his endeavors especially the virgin galatic!

  3. Women on February 15, 2009 at 11:49 pm

    Wait so when they merge I have just one question. Will virgin users be able to get Helio phones and Use them WITH virginmobile prepaid plans? Like I want to buy the ocean or ocean 2 by helio but I want to still just pay 20 dollars for unlimited texting…is that possible??? I sure hope so…that would be awesome.