Virgin Mobile USA poised to acquire Helio

Virgin Mobile USA will acquire embattled MVNO Helio, according to a report in The Financial Times. Citing sources with inside knowledge of the negotiations, The FT says Virgin Mobile and Helio majority owner SK Telecom have agreed in principle to a deal that will see Helio's operations and subscribers absorbed into the Virgin Mobile USA brand--in exchange, Virgin will issue new shares giving SK Telecom roughly 20 percent equity in the combined business. SK will also invest a nominal sum in Virgin Mobile USA.

The Financial Times notes that the post-merger Virgin Mobile USA will now be able to expand into the monthly contracts markets and renegotiate its network capacity agreement with Sprint Nextel. Last month, the MVNO reported first quarter net income of $4.8 million, down 75 percent year-over-year--in addition, the company announced anticipated Q2 subscriber losses between 130,000 and 160,000. Helio reported in January subscriber totals approaching the 200,000 mark.

Earlier this week, Gizmodo reported [1] that SK Telecom and Virgin Mobile USA's merger negotiations were stalled, with Virgin's continued interest in Helio hinging on either a bankruptcy declaration or massive liquidation. The article also said Helio was poised to begin closing its retail locations and kiosks.

For more on the Virgin Mobile USA/Helio deal:
- read this Financial Times article [2]

Related articles:
EarthLink loses $111.3 million on Helio [3] in 2007
Sky Dayton resigns as Helio [4] CEO