Virgin Mobile purchased Helio today for $39 million in equity. Helio is a small MVNO that made its name by selling powerful and high-end telephones aimed at technophiles and, thanks to an investment by South Korea’s SK Telecom, Korean-Americans. As part of the deal, Virgin Mobile is also receiving $50 million to pay down Helio’s debt (half from SK Telecom, and half from its parent company Virgin Group), as well as an additional revolving credit facility of $60 million. Just last September, SK Telecom tried to save Helio by pouring an extra $270 million into it, to no avail.
The Helio brand will be subsumed by Virgin Mobile. All of the Helio stores will close except, it’s reported, the flagship store in New York, and there is a full restructuring of the company going on right now. Thus, after much struggling, Helio enters the deadpool.
Helio had 170,000 subscribers while Virgin Mobile currently has about 5 million. The deal will also give Virgin access to a number of technologies owned by Helio including customer management and cellphone deck applications.
Helio also has received investments from Earthlink, but when Earthlink pulled out last year and charismatic CEO Sky Dayton stepped down it was clear something was afoot.
Peter Ha at CrunchGear wrote a full analysis of the merger:
So what exactly does the merger mean for customers of Helio who have grown to love the hardware and features that Helio is best known for? Well, Virgin Mobile will be keeping all of those goodies in place. If you’ve seen any VM devices, you know they stink. VM is relatively boring and absorbing the technology Helio is best known for will certainly boost the MVNO’s status and appeal to a broader audience. That means future VM devices will include apps such as Google Maps with GPS, YouTube and MySpace… all of which Helio brought to the table before other carriers.
What about the Ocean 2? If you haven’t already figured it out by now, the Ocean 2 has been delayed over the last few months because of merger talks. It’s unclear when the device will actually launch, but it hasn’t been scrapped.
While I hate to see Helio dissolve, this is great for both brands. VM knows how to make money while Helio knows how to create technology that works and is appealing.
With Helio gone Boost Mobile in the only targeted MVNO running in the US right now.
What about that huge sign in Westwood? Who gets that?!
Does this mean I don’t have to pay the cancellation fee?
Yikes! A $270m injection that had little effect. They were right on with their 3G phones, wonder what went wrong…
This merger isn’t that interesting…..
What about Microsoft-Yahoo! Deal…
Just Joking….
Kindly avoid MS-Y! matters(They appear boring now):)
Keep going versatile like this
Well i saw that coming, the only place I saw the phone was in the commercial. It seemed cool but no phone will touch the iPhone for a wile.
Helio had great products, unfortunatly it never gained control of an actual niche in the market, maybe with them and virgin combined some progress may be seen.
I’ll take a look at VM when the Ocean 2 comes out. I feel much better giving my money to Richard Branson than to Sky Dayton and, through him, to the Church of Scientology.
I did not like Helio, their phones looked like crap.
Its not a phone, its a piece of crap!!
- http://easysumm...y.blogspot.com/
Boost, the only targeted MVNO left…
What about kajeet, the cell phone for kids?
Apparently, from the email I got the cancellation fee is still in full effect ($175.00)…
Now, I wish they’d give us more phone device options…4 phones??? C’mon now!
What is the failure rate in business? Something like 90% of all business ventures fail?
Makes me wonder why some of us are serial entrepreneurs.
Oh yeah, because we love the challenge and the small percentage of success stories make the goal worth pursuing.
Someone please show these guys how to make paths in photoshop.
Helio never clearly differentiated itself (successfully) in the cell phone industry. Yes, some of their phones had some cool multimedia offerings but I felt as though their products never carried a ton of brand equity (vs. Apple Phone for example)… Helio was horrible with their money. Have you seen the building up in Westwood? – its a gem. While that’s cool, I can’t even fathom how much their rent cost. They didn’t follow the strategies of success look… http://www.read...ex.php?RTA=web2
Did anybody get a confirmation email when they submitted their TC50 application? Just checking…
I’m with the CVOS geezer – I have no idea what the post said. My eyes kept straying back to that terrible pathing on the image. Amateurs.
I’m not sure what a “targeted MVNO” is (would some MVNOs be “untargeted”?), but what about Creedo Mobile (Working Assets providing service through Sprint)?
In general, I don’t see how there can be many competing carriers in the long run, much less room for the additional layer of overhead created by the MVNO model. Anything that would differentiate most MVNOs should be a service provided by all carriers.
Phone companies provide a service which is essentially a commodity, and attempts to compete on features (rather than just providing quality, price and service) are mostly artificial.
Will it improve VM for people? I use VM because I don’t make or receive a lot of cell phone calls (thereby bringing my cost to around $6-8 per month), but one thing that they do that drives me crazy is they lock the phones so I cannot download my contacts! They may lose me as a customer if some other prepaid plav allows that feature… unlikely I will go with a “smart phone” and data plan right now because I can’t cost justify those features for limited use.
I gave an Ocean a month trial but canceled out of my contract while I still could simply because Sprint coverage sucks. Having left ATT for Helio I had some high hopes. I loved the phone, everyone that saw it loved it. But having NO coverage in the small mom ‘n pop I was working (at the time) and regularly getting half or a quarter of long text messages was really frustrating. How many short messages did I completely miss?
The deal breaker was seeing how poor coverage was while driving interstate. ATT customer service might suck, but everything else is spot on. And no, I am not an iPhone customer (ATT Tilt actually).
… Before someone wants to enlighten me. Yes, I’m aware it was Sprint underneath. And yes, the issues I had was coverage and not a bad phone as evidenced by comparing against other Sprint customers (friends and family). I’ve since convinced a few to drop Sprint for Verizon or ATT simply based on the same comparisons with several phones (the Tilt and my old phones) on ATT.
I humored the local store while still in my 30 day guarantee and tried everything they suggested (as well as the phone rep from Helio), but I was NOT going to let it go past 30 days.
No surprise here.
Any one have a clue who will be the service provider now?
I see alot of dissing sprint going on but it beat the hell out of Verizon and ATT in my area.
I have the Ocean and this gem recieved and made calls where and when no one elses would.
Plus, I am totally unfamiliar with VM’s service.
Another buyout of a company
MVNO Blyk in the UK is doing quite well. They’re even expanding to the Netherlands. So not all MVNOs are dead in the water. But you can’t get Blyk’s service — free mobile phone minutes and SMSes in exchange for viewing SMS and MMS ads — unless you are between 16 and 24 years old.
There are a number of MVNOs in Europe that are also doing fine. I have Lebara in the Netherlands, whose calling rates to countries outside the EU are very attractive. You pop your Lebara SIM card into your phone and off you go.
For the record, Boost Mobile is NOT an MVNO. It is a wholly owned division of Sprint. This is a common misperception about Boost that has actually not been the case in many years as it was a wholly owned division of Nextel prior to the merger. As is apparent from the results of MVNOs, it’s a difficult way to play in here in the U.S.
My service was turned off on the third day after the due, and it took an hour to restore my service… I can’t wait to use other wireless provider. I have to wait a year. Helio customer service is horrible.
I have a Helio Ocean 1 and just upgraded the the Ocean 2. I’m in love with the phone, the cell phone coverage area and the customer service! Not sure what you guys are talking about because I absolutely adore my phone. I also have an ATT line for my Mom’s phone and could have easily gotten an iPhone. Let’s face it, that’s a cool phone too, but NO cell phone company out there can match Helio’s data and minutes plan. UNLIMITED data, UNLIMITED minutes, UNLIMITED texts, plus Myspace, FB, Twitter, Youtube and every email client under the sun! GREAT PHONE, GREAT DEVICE!