Virgin Mobile USA + Helio Acquisition for $39 million

Virgin Mobile USA + Helio Acquisition for $39 million. Virgin Mobile USA announced that it has entered into an agreement to acquire Helio, a joint venture between SK Telecom and EarthLink, Inc. (Nasdaq: ELNK) providing highly advanced postpaid products and services with unique user applications.

Under the terms of the agreement, Virgin Mobile USA will acquire Helio from SK Telecom and EarthLink for limited partnership units equivalent to 13 million shares of Virgin Mobile USA class A common stock, with a value of $39 million based on the closing price of Virgin Mobile USA’s class A shares on June 26, 2008.

The transaction is expected to close in the third quarter of 2008, subject to receiving regulatory approvals and satisfaction of other customary closing conditions. With the acquisition of Helio, Virgin Mobile USA will gain an established and highly advanced postpaid billing and customer care platform. In addition, Helio has approximately 170,000 existing subscribers with an ARPU of approximately $80 and a handset inventory of approximately 85,000 units with a book value of approximately $17 million.

Acquiring Helio’s customers and expanding its offer portfolio is expected to increase Virgin Mobile USA’s volume of minutes and drive down the Company’s cost per minute under an amendment to its PCS Services agreement with Sprint.

Schulman added, “This strategic acquisition integrates Virgin Mobile USA’s brand recognition, scale and extensive distribution with Helio’s accomplishments in advanced handset and content offerings. It provides us with a firm foundation to create a truly holistic, leading-edge product suite to service all of our existing and prospective customers. With about 20% of our disconnects currently going to postpaid products, we believe this new platform will be a powerful retention tool as we offer a unique and desirable postpaid alternative to our customers.”

Helio has been at the forefront in developing leading data services, in partnership with You Tube, Google and MySpace. Virgin Mobile USA will use this unique intellectual property to strengthen its competitive position in the prepaid, hybrid and postpaid markets while moving its handset lineup upmarket. Consequently, the Company expects to drive incremental growth in data revenues in the future.

(source)