Virgin US buys rival Helio

Virgin Mobile USA has paid $39 million (£19.7m) for MVNO rival Helio, a joint venture between Korean network operator SK Telecom and internet service provider EarthLink.

The acquisition comprises, in the main, Helio's contract billing platform, its 170,000 subscribers and a handset inventory of 85,000 units, worth around $17 million.

Helio launched as a contract MVNO offering premium content and bespoke handsets in the US.

It has an ARPU of $80. Virgin Mobile USA has, to date, offered cheap rate prepay calling only.

Sprint, which supports both MVNOs, has revised its airtime contract and Virgin Mobile USA expects an eight per cent reduction in network costs in 2009.

Virgin Group and SK Telecom will also each invest $25 million of equity capital in the merged MVNO business to pay down loans, and a further $25 million and $35 million respectively to increase Virgin Mobile USA’s existing revolving debt facility.