Here's some interesting news from the wireless phone industry. According to a Reuters article, Virgin Mobile USA is set to acquire Helio, the U.S. mobile arm of South Korea's SK Telecom Co. The sum involve in this deal has not been disclosed and the deal is far from final. Sources have indicated that the terms agreed upon by both parties are loose.The article also cited that this decision was reached because combining the struggling businesses of both parties was sen as beneficial. The announcement about this deal is expected to be released in the near future. However, SK Telecom did not offer any comments that would confirm this merge between struggling mobile phone carriers.
Mobile phone experts say that this is a good move from both companies even if there's no guarantee that the combined company will succeed. If the deals becomes complete, then SK Telecom can reduce risks from the U.S. business.
They expect the combination to work because Virgin Mobile has a scale and Helio has strong services. Some experts believe that the Virgin-Helio merge make sense because both companies target young customers and rent space on Sprint's network.
Helio is owned by SK who holds 69 percent and EarthLink Inc who governs 28 percent. According to the article, Virgin Mobile USA has expressed a desire to purchase the 69% of Helio owned by SK Telecom. However, there is no clear information whether Earthlink will sell its share of Helio to Virgin Mobile.
The initial terms of the agreement states that once Virgin Mobile USA takes over, SK Telecom would agree to invest a nominal amount of money in Helio. The agreement indicate that Helio will be injected into Virgin Mobile USA and the Virgin brand will be retained.
Well, this is certainly interesting. This merger may give Virgin Mobile the push it needs to become a major mobile phone carrier. Then again, it might also result in a rough merge similar to Sprint and Nextel. Tune in to this blog for more news and info on the world of wireless.
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