Virgin Mobile: okay, yeah, we're talking to SK Telecom
[Via mocoNews]
Filed under: Helio, Virgin Mobile, MVNOs
[Via mocoNews]
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Reader Comments (Page 1 of 1)
Michael E. Williams @ May 14th 2008 3:18PM
I’ve always admired Helio for their no-nonsense approach to marketing. In fact, when they launched in October 2005, Helio and Sky Dayton promised to “End Confusing Rate Plans and Cheap Gimmicks.” Apparently something went terribly wrong. I wrote a blog post about their latest “near bait and switch” marketing ploy.
SK Telecom may never give up on Helio, but I have.
http://blog.sensiblemarketing.biz/cheap-marketing-gimmicks-at-helio/
badqat @ May 14th 2008 11:12PM
I'm at a loss to figure how those lame "Don't call it a phone" commercials somehow equaled "no nonsense marketing".
Pretty much nonsense from the start.
PEZ @ May 14th 2008 3:58PM
Hey MEW (that would be your intials, clever, arent I?) MVNO's will always suck, because they just do not have the backbone or the funds to be honest and up front about marketing deals, sideways discounts or contracts.
But we new this! The idea of two virtual companies trying to create a shadow company is about the saddest thing I have ever heard. Its like that movie IMPOSTER, no one knows who you are.
/end
Jamar @ May 15th 2008 10:03AM
Maybe you haven't read up on Helio's history. Helio is essentially the US arm of SK Telecom. Go look at SK Telecom and tell me that they don't have backbone or funds. Helio is the only serious attempt an Asian carrier has made in the US market- they need encouragement, dammit, or the US mobile market will continue languishing.
jmc @ May 14th 2008 9:49PM
Helio doesnt need to merge with a company thats in basically the same boat as them meaning about to go out of business. What they should be focusing on is purchasing their own network from another company like possibly the nextel network sprint might be trying to get rid of. That way they can get out of the sinking ocean of failed MVNOs.
badqat @ May 14th 2008 11:14PM
Why would ANYONE want the antique, over-taxed, and downright crappy iDEN network? It'd be a huge step backwards...
Jamar @ May 15th 2008 10:05AM
I hardly think Helio's going out of business. SK Telecom won't give up so soon, but iDen isn't the way out either. SK Telecom is CDMA- Helio is too and it will stay that way even if it comes down to buying Sprint or something.
Sensible Marketing Guy @ May 15th 2008 1:32PM
Jamar,
You hardly think that Helio is going out of business? Obviously, you are not an investor or have had much experience with the business side of running a company. Let me explain for you: Yes, Helio has experienced growth in terms of revenue and adding subscribers and the have a better ARPU than other wireless carriers, but they have no sense of cost-control and burn rate is horrific. Their cost to acquire a new customer is much higher than all the other carriers and MVNOs out there.
Regarding their balance sheet, in 2006, Helio’s net loss was $192 million, and in 2007 that number increased to $326 million. The losses do not come as a surprise; for example, Helio’s advertising spend jumped from $21.6 million in 2006 to $47.5 million in 2007. This is a company who staged coast-to-coast red-carpet events at very expensive nighclubs, large billboard displays, television ads and...in my opinion, very in-effective online marketing (email marketing, pay-per-click advertising, and other ads and banners). Their online marketing expenses account for a large part of their budget, but their conversion rate is abnormally low...maybe due to gimmicks like the one I wrote about in my post. Helio reported that it has raised a total of around $600 million. Analysts that I have spoken with believe they have about $5 Million of that left. But, really the final nail in their coffin is a dangerously low working capital. In my opinion, these factors are why they are looking for a buyer.
In my opinion, Virgin (or any other carrier) will not buy them and assume all those liabilities because if they wait a few more months--they can buy Helio’s assets out of bankruptcy court. A small private equity firm got the assets of AMP’d Mobile at a bargain basement price when they went belly up. Earthlink has already cut off Helip because they were a drain on their resources...and Earthlink suffered a heavy toll because of Heilo---they recently laid off about half their staff. Sure, the guys at SK Telecom say “they will never give up on Helio” but shareholders will always cut off the feeding tube of a bloated, cash burning subsidiary. Also, the Koreans are likely to go the bankruptcy route because laws in the USA make it very easy for a company to file bankruptcy.