Virgin Mobile USA Inc. said Friday it completed its acquisition of struggling cellular carrier Helio LLC for $38 million in stock. Under the terms of the buyout, announced June 27, Helio owners EarthLink Inc. and SK Telecom, a South Korean carrier, received limited partnership units and shares equivalent to 13 million shares of Virgin Mobile USA stock. In addition, SK Telecom and Virgin Group will each invest $25 million in Virgin Mobile USA for preferred shares. With the deal completed, Virgin Mobile will be able to expand its services from only pre-paid to also postpaid and to offer higher-end data services. SK telecom will also receive two seats on Virgin Mobile USA’s board of directors.
“This acquisition of Helio also comes with a number of financial benefits, including improved network rates from Sprint for Virgin Mobile USA, and strategic investments by SK Telecom and Virgin Group which improve our capital structure and increase liquidity,” said Dan Schulman, Virgin Mobile’s chief executive. Shares of Virgin Mobile dipped 3 cents to $2.69 in midday trading. Both Virgin Mobile and Helio use Sprint Nextel Corp.’s network, which makes the integration of the two businesses possible. Virgin Mobile said the better network rates will reduce effective cost per minute by 8 percent in 2009.
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