After a tough year in which partner Earthlink pulled back from its commitment to Helio, the virtual mobile carrier is now losing its CEO, Sky Dayton. (Dayton was also the founder of Earthlink). Although Dayton will become chairman, Helio’s remaining corporate partner, Korea’s SK Telecom, appears to be consolidating its control over the company (perhaps in an attempt to stem its losses). Dayton will be succeeded by Helio’s current president and COO Wonhee Sull, a former executive at SK Telecom.
Running a mobile service on another company’s network is difficult to pull off financially because the operation is always at a cost disadvantage to the big mobile carriers that own the networks that the MVNO’s (mobile virtual network operators) are leasing—in this case Sprint’s. The company claims 200,000 subscribers, paying an average of $85 a month, and is among the leaders in getting subscribers to use data services. (Helio users, on average, send 550 text messages a month; 95 percent access the Web on their phones versus a 13 percent industry average; and 60 percent use their phones to access MySpace alone). But it is still not making money. That is with revenues of about $20 million a month, according to the company (a $240 million run-rate). In the mobile world, you need a much higher number of subscribers to hit critical mass, even if you don’t have to spend billions of dollars on building out networks.
The short history of MVNOs is already littered with failed companies. The most inglorious of these was Amp’d, which went bankrupt after going through $360 million in capital, some of which went to buying ads on MTV and distributing promotional condoms. Hopefully, Helio won’t suffer the same fate.