Virgin going public, Sprint to reap rewards

We avoided this story for a while, because it’s full of financial mumbo jumbo that we don’t understand, and we wish not to subject you to. However, it was really only a matter of time before we mentioned it: Virgin Mobile is going public. While other MVNOs are biting the dust, or having their funding ceased, Virgin has continued to persevere. True, they have yet to turn a yearly profit, but that could all be changing this year. It’s a testament to what we’ve been saying ever since Amp’d crumbled: A successful MVNO requires nearly infinite patience. Sprint has demonstrated that patience with Virgin, and it’s going to pay off in the very near future. Virgin is expected to raise between $474 and $537 million from their initial public offering (IPO). Sprint Nextel Corp. could see up to $200 million from the IPO, which would certainly aid them in their expanding endeavors. On top of that, the proceeds raised from the IPO will allow Virgin to repay a $45 million debt to Sprint, an even better sign for the MVNO and the parent carrier. The road for Virgin might have been rocky, but they’ve really shone brightly through it all. Yes, they accumulated over $500 in debts since their introduction in 2002, but once again, patience allowed them to climb out of that debt. In 2004, two years into the MVNO’s existence, they had 2.8 million subscribers. Three years later, they’re up to 4.8 million, which is remarkable given the high churn rate in the prepaid arena.

The company has been narrowing its losses. Virgin lost about $36 million on 2006 sales of $1.1 billion. Through the first six months of 2007, Virgin reported net income of $26.5 million on sales of $667 million.

This year seems to be the year of Virgin. We hope they do well with their IPO. Now, if only they’d ditch the voice-activated navigation on their customer service lines. [Kansas City Star]]]>