Virgin Mobile and Helio discuss merging wireless services
Redefining "staying together for the Kids," largely youth-oriented MVNOs Virgin Mobile and Helio have reportedly begun talks that could result in a merged entity.
As mobile phone saturation approaches, the market for mobile virtual network operators (MVNOs) shrinks. In 2007, Amp'd Mobile went bankrupt, and Disney Mobile shut down.
Meanwhile, Helio posted a $327 million dollar revenue loss, with parent company EarthLink announcing its intention to divest its interest in the upstart carrier. In the first quarter of 2008, Virgin Mobile also reported a year-over-year earnings drop of 75 percent.
Both Virgin USA and Helio lease Sprint Nextel service time and a combined effort may be just what the companies need to stay afloat through a worsening economy. Analysts have noted that the current economic slump has changed how teens spend their disposable income, and with Virgin Mobile's main subscriber base being under the age of 30, its security is in jeopardy.
The company has already begun to adopt innovative ways to supplant lost teen revenue.
The Sugar Mama campaign grants free airtime to subscribers if they take ad-related surveys or spend time on an advertiser's Web site. Virgin Mobile reported that over 330,000 of its 4.8 million US subscribers signed up for the program, which grants one free minute of airtime per every 45 seconds spent being advertised to.
If this strategy was applied to text messaging, it would provide an attractive alternative for Helio's customer base, who reportedly send an average of 550 texts per month and access the mobile Web 82% more than the industry average.
Helio was originally marketed toward the younger, more tech-savvy crowd, with Mobile MySpace a large fixture of its service. But recently, parent company SK Telecom -- which formed the joint venture with EarthLink -- has made a strong push in the Korean-American market instead. A merger with Virgin USA's highly youth-oriented service could pull Helio back onto its original path.