Virgin Mobile USA Makes $412M in IPO

Mobile virtual network operator (MVNO) Virgin Mobile USA Inc. (NYSE: VM) made $412.5 million in its market debut on the New York Stock Exchange today with shares closing at $15.91, nearly a dollar above the asking price.

Virgin Mobile, a joint venture between Sprint Corp. (NYSE: S) and Richard Branson's Virgin Media Inc. (Nasdaq: VMED) group, sold off 27.5 million shares at $15 each, the low end of its range. The shares opened at $15 today and traded as high as $16.63 during the day. The stock is trading in the $15.90 range after hours.

The earnings were toward the low end of what Virgin had hoped to make from its IPO. It said in July it could make as much as $506 million. The $412.5 million haul, however, was far more than the operator had originally counted on. (See Virgin Guns for $506M US IPO and Virgin Mobile USA Files for $100M IPO.)

Virgin Mobile says in its latest SEC papers that it will use some of the IPO money to pay minority interest Sprint Nextel $136 million. Virgin Mobile has also detailed some of the debt it plans to reduce with the new influx of cash.

Virgin Mobile USA is one of a very few MVNOs that has managed to stay afloat in the U.S. The operator runs a youth-oriented pay-as-you go phone service over the Sprint network. Rivals such as Amp'd Mobile Inc. have crashed and burned with similar offerings (See Amp'd Switches Off.)

Virgin Mobile reported net income of $29.3 million on revenue of $667 million in the first six months of year.

— Dan Jones, Site Editor, Unstrung