Virgin Mobile USA Files for $100M IPO

Mobile operator Virgin Mobile USA Inc. (NYSE: VM), a 50/50 joint venture between billionaire Richard Branson's U.K.-based Virgin Group and Sprint Corp. (NYSE: S), has filed paperwork with the Securities and Exchange Commission (SEC) for an IPO on the New York Stock Exchange that could raise up to $100 million. (See Virgin Mobile Files for IPO.)

Virgin Mobile USA is a mobile virtual network operator (MVNO), running branded services over Sprint's network rather than owning its own infrastructure. It's primarily focused on providing prepaid services to the cool kids in the 18- to 34-year-old set -- with features listed on its Website like "Rescue Rings" to get out of "a nightmare blind date, meeting, class, or conversation with no way out" and "SpongeBob's Deep Sea Thought of the Day." [Ed. note: Does it get any better?]

The company is yet to settle on a share price or the number of shares to be sold in the offering, which will see it listed on the NYSE under the ticker symbol VM.

Sprint Nextel and Virgin Group are both contributing shares to the long-rumored IPO and will retain control of the operator once it is public. Lehman Brothers , Merrill Lynch & Co. Inc. , and Banc of America Securities LLC have been appointed as joint book-running managers.

According to the filing, the operator will use the proceeds of the IPO and a new senior credit facility to pay an unspecified sum to Sprint Nextel and pay off its debts. As of December 2006, it had $460.5 million outstanding on a senior secured credit facility and $58 million on a subordinated secured revolving credit facility.

The service provider paid Sprint Nextel $225 million for the use of its network last year.

Virgin Mobile is a success story in the relatively young U.S. MVNO space, a sector that's had its share of failures -- remember Mobile ESPN? (See Mobile ESPN Gets Whistle.) The filing notes that Virgin Mobile USA had a customer base of 4.88 million at the end of March, up from 4.6 million at the end of 2006 and 3.84 million at the end of 2005. (See Virgin Mobile USA Hits 4.6M.)

The company crossed the $1 billion revenue threshold last year, reporting revenues of $1.02 billion for the year ended December 31 -- a 15.4 percent increase on 2005. "This increase was driven primarily by the 19.0% growth in our customer base, partially offset by the decline in our ARPU, from $22.54 to $21.48," says the filing. Net loss for the year dropped from $102.87 million in 2005 to $36.7 million in 2006.

— Nicole Willing, Reporter, Light Reading