Virgin Mobile USA Tells Wall Street “No Comment” Regarding Helio Rumors
By Tricia Duryee - Tue 13 May 2008 04:54 PM PST
Rafat reported last week that Virgin Mobile USA (NYSE: VM) is in merger talks with the much smaller and troubled MVNO Helio, and this week the rumors have the MVNO responding to Wall Street. At today’s Morgan Stanley 13th Annual Communications Conference, it didn’t take long for someone to ask Virgin Mobile’s CFO John Feehan about Helio. His canned response: “We’ve heard the rumors and we won’t comment on them.” Webcast.
Here are excerpts from the Q&A:
Is the company looking at acquisitions?: ”Since the early days of roadshow, we said we feel there’s inorganic ways to grow this business, and there’s other MVNOs that will not make it,” Feehan said. “We are constantly looking at opportunities.”
What about Helio?: “We’ve heard the rumors and we won’t comment on them, except to say we are always looking at other MVNOs and other ways to grow things.”
Would Virgin keep another brand?: “I think it would depend on that brand,” he said. If others resonated well in a different segment of the population, it might be worth keeping. “But there may be other brands that don’t make sense to keep and we’d pull it under the Virgin brand.”
Are MVNOs viable?: “We feel our model is definitely sustainable...We have an excellent network partner in Sprint (NYSE: S)—We have a good contract with Sprint that’s on a variable basis,” he said. Early on, Sprint was a 50 percent owner in Virgin, so the terms were favorable. Virgin locked-in a 20-year deal ending in 2027, and only pays for a voice minute when a customer uses one. Today, Sprint owns slightly more than 18 percent. The other trick is in getting to scale and having good distribution. It’s hard to get the retail outlets on board if you don’t have the scale, and without retail, you don’t have scale. Feehan said they have both.
On Sprint and Clearwire? Would you deploy WiMax?: “Our Sprint contract is a 20-year contract, and we knew when we signed it that there was a good chance that we weren’t going to be on a 2G or 3G network for 20 years, so the contract allows us access.” If and when it’s fully deployed, he said they look at whether it makes sense.
Posted in: Companies, Operators, MVNO, Helio, Virgin
Tags: john feehan,
