Helio had received hundreds of millions in funding from backers Earthink and SK Telecom since its inception in 2005. Most recently, SK said it would back Helio with up to $270 million in cash, as Earthink decided to stop funding the venture.
Now, Virgin Group and SK Telecom each will invest $25 million in the company. SK will get a 17 percent investment in Virgin Mobile and two seats on the Virgin Mobile’s board of directors.
The Helio fire sale should come as no surprise to anyone who has watched the quick rise and equally sudden fall of MVNOs targeting tweens, teens, and twentysomethings in the U.S. Amp'd Mobile Inc. and even the mighty Disney, among others, took a run at the market in the U.S. and stumbled. (See Amp'd Switches Off and Mobile Mouse Shut Down.)
Only Virgin Mobile has survived, although not always thrived. The operator runs a youth-oriented pay-as-you go phone service over the Sprint network. (See Virgin Mobile USA Makes $412M in IPO.)
Helio also runs over the Sprint network, and Virgin says the deal will help it to reduce network costs and also debt, thanks to the SK investment. The deal is expected to close in the third quarter.
— Dan Jones, Site Editor, Unstrung