Virgin Mobile and Helio: The Fallout

MediaPost has a detailed analysis of Virgin Mobile’s bargain-priced, $39 million acquisition of the troubled Helio mobile virtual network operator (MVNO).

“By shutting down Helio’s swanky retail outlets and kiosks among other cost-cutting moves, Virgin expects to reduce overhead by 70% by year’s end,” the report said. “The company plans to phase out the Helio brand except in Korean-American markets, where it remains popular.”

By buying Helio and absorbing its devices and customer base, Virgin Mobile gets to offer its first 3G device, along with a subscription-based service that can hold on to more customers. Virgin said in the report that about 20% of their customers leave Virgin Mobile for a traditional post-paid contract as the major U.S. carriers offer.

This also leaves Virgin Mobile as the only MVNO standing in the U.S. As “virtual” operators, Virgin and Helio also both rely on the Sprint network for service, the report said—and both also focus on the youth market, which prefers high-end mobile media features such as what Helio was offering.

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