SK Telecom to buy Virgin Mobile to buy Helio?

May 8, 2008

SK Telecom to buy Virgin Mobile to buy Helio?We heard through the grape vine Virgin Mobile and Helio are talking about merging. Both carriers borrow from Sprint’s network, and they’ve both mastered aspects of the cell phone business that the other hasn’t. A merger could save both companies — rescue one from mediocrity and the other from extinction.

Here’s the deal. Helio offers great phones with advanced, reliable, and easy service. This blogger has the Ocean, and I can vouch for its amazing-ness. Unfortunately, Helio has problems. It lost over half a billion dollars in three years, and its parent companies need to expand or kill the operation since the risky MVNO business is costing them dearly. It is unknown how long they’ll keep pumping money into a company that isn’t returning a real profit.

Furthermore, Virgin Mobile is a pretty successful MVNO with over 5 million subscribers. The company makes a decent profit, but it’s stuck in the land of boring handsets. However, Virgin Mobile’s plans are really, really cheap. Are you starting to see how these two companies fit together like my PS3 and 42″ 1080p LCD HDTV?

Helio needs subscribers and money. Virgin Mobile needs an elite line of handsets and better mobile software and services. Together they could truly give Verizon and others a run for their dollar. We’d say they might even give Sprint some competition, but both virtual carriers borrow from Sprint’s network. As a result, they have to pay Sprint for network space and services, so it’ll reap the rewards if these companies grow at all.

A possible scenario for the buyout that has been discussed involves Helio’s majority parent company, which would buy Virgin Mobile USA. VMUSA would then buy Helio through an all-stock transaction.

We’re unsure if the companies would merge names or adhere to one. Considering Virgin Mobile’s success, we’d guess Helio would lose its name unless it becomes a sub-brand of elite phones. But keep in mind, this is all unofficial, and it may not even happen. Either way, Helio needs to do something different if it wants to stick around, and this seems like a workable plan.

 

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One Response to “SK Telecom to buy Virgin Mobile to buy Helio?”

  1. Sensible Marketing Guy:

    If anyone from Virgin Mobile is reading this I have two bits of advice for you.

    1. Wait a few more months and buy Helio’s assets out of bankruptcy court. A small private equity firm got the assets of AMP’d Mobile at a bargain basement price when they went belly up. Sure, the guys at SK Telecom say “they will never give up on Helio” but shareholders will always cut off the feeding tube of a bloated, cash burning subsidiary.

    2. If you do wind up acquiring Helio, please fire their marketing team and don’t resort to cheap marketing gimmicks to snare customers. Read my blog post about Helio’s latest marketing gimmick: http://blog.sensiblemarketing.biz/cheap-marketing-gimmicks-at-helio/

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