Long before Virgin Mobile acquired Helio, we started hearing whispers that the Samsung F400 was destined for the carrier’s lineup. With its vertically dual-sliding design featuring a number pad on one end and dual speakers on the other, it would have been a pretty snazzy little handset for music fans on everyone’s favorite MVNO. Don’t expect to expect to see this one hit the shelves anytime soon, though.

Read the rest of this entry at MobileCrunch »

Long before Virgin Mobile acquired Helio, we started hearing whispers that the Samsung F400 was destined for the carrier’s lineup. With its vertically dual-sliding design featuring a number pad on one end and dual speakers on the other, it would have been a pretty snazzy little handset for music fans on everyone’s favorite MVNO.

Alas, things got a bit crazy in the months leading up to the acquisition. The Ocean 2 slipped all the way back to January of next year, and Helio’s version of the F400 (which would have been modeled the SPH-A533) purportedly got canned. Don’t get your hopes up on a post-acquisition revival – chances are, Virgin Mobile has moved on.

More shots after the jump. (Thanks Kill3r24!)

When I clicked my way through to the image attached to this morning’s Helio Connect press announcement, I couldn’t help but laugh. Not because I find social news site aggregators inherently funny, mind you – but because there’s a little Easter Egg hidden inside and, oddly enough, it’s somewhat related to yours truly.

If you haven’t spotted it by now, take a glance at the second item on the list. “Secret handset”, it reads. Now, before you get too excited that you’re getting a sneak peak at Helio’s next big thing, read on after the jump for the history of this image.

Read the rest of this post at MobileCrunch >>

Now that the Ocean 2 has slipped back until January of ’09 at the earliest, we’ve cruised right by the September confidentiality date of the original FCC filing back in March. As a result, a handful of hardware photos and a pack of details have made their way out.

Check’em out over at MobileCrunch >>

Now that the Ocean 2 has slipped back until January of ’09 at the earliest, we’ve cruised right by the September confidentiality date of the original FCC filing back in March. As a result, a handful of hardware photos and a whole slew of details have made their way out.

Along with the obvious aesthetic similarities, the handset borrows the dual-slide concept of the original Ocean, offering both a number pad and a QWERTY keyboard. It’s got a 2 megapixel shooter, QVGA screen, EVDO 3G, and Bluetooth/microSD support. While the Ocean II still rocks the Helio logo in these shots, it’s up in the air whether or not Virgin Mobile will be swapping their own branding in now that they’ve acquired the company.

Check out all the shots after the jump.

[Via Phonescoop]

Already blue-faced from holding your breath for Oz 2? You might just go purple before you’ve got one in your hands. According to Jayne Wallace, spokeswoman for Virgin Mobile, we won’t be seeing it on the shelves until 2009. Why? Because it’s not yet “the best it can be.”

This one pangs the heart a bit to write about. As a longtime rooter of Helio’s efforts, I’ve got at least a handful of people I’d consider friends who worked at Helio, some now under Virgin Mobile’s roof after the acquisition. At the same time, I have an obligation to my readers (and myself) to be as objective as possible in my writing. (Oh, and for the sake of full disclosure: Though a writer by day, I occasionally don a consultant’s cap. Helio is one of the companies I have consulted.)

This phone needed to come out in 2008. Hell, it probably should have come out in 2007, as soon after the release of the original Ocean as possible. It needed to ride that tide of hype that the Ocean managed to generate, while fixing the nasty little issues that kept the original from being superb. To push it back into 2009 is to further let it slip into obscurity behind the likes of the Sidekick series, not to mention the countless other teen-friendly QWERTY handsets.

Oh well – If nothing else, it might just wrangle in those stray customers that are interested in Virgin Mobile and want a QWERTY handset, but look at the Wild Card and turn the other way. For all I know, that’s exactly what is expected of it.

Helio always had pimp-ass mobile phones and it was kind of sad watching them slowly die, still clenching some of the best handsets in the States. Virgin Mobile picked up the struggling service provider a few months ago and today, launched the new brand.

Today, Virgin Mobile USA unveiled its new branding message to highlight the acquisition: “Helio By Virgin Mobile: Plan To Have It All.”

Right out of the gate, Helio by Virgin Mobile (got to use the right name) is launching a new phone dubbed the Shuttle. It’s just to bad that the press release didn’t announce any more info ’bout the handset including price or manufacturer. Also, the $80 A La Carte plan is bumping up from 1500 minutes to unlimited which is available to both current and future subscribers. Hopefully more good is to come from the Virgin acquisition.

Virgin Mobile USA today announced that they had sealed the deal to bring buzzd’s location-based services directly to the WAP deck of all VirMo handsets. buzzd uses your location to find local happenings, doubling as a way to quickly find reviews for restaurants in your immediate area.

This is really more of an extension than some brand new deal. Helio partnered with buzzd back in February, and Virgin Mobile inherited the deal when they gobbled up Helio back in August – now they’re just stretching the services to the rest of the handsets not under the Helio umbrella.

As part of the $39 million dollar merger agreement between Virgin Mobile USA and Helio back in June, Helio is contractually obligated to cut down their costs by around 70 percent.

According to Virgin Mobile USA’s CEO, Dan Schulman, such reductions are already well underway. During last night’s VMUSA Q2 2008 earnings conference call, he announced that over two-thirds of the staff at Helio House had been let go, with nearly all of the corporate-owned stores and kiosks getting the shutters-and-plywood makeover. Our best to everyone involved.

On the fruition of the partnership, Schulman added: “Our integration teams are working hard behind the scenes to put together compelling products and services, and we are excited about the prospect of launching differentiated plans, handsets and services over the next several quarters.”

With Q3 just about half-way over and the deal still not completely finalized, anyone still holding their breath for an Ocean 2 will probably be a bit blue in the face until some time in 2009.

[Via mocoNews]

For the immediate future, VM isn’t deviating from its pay-as-you-go business model. Just last month they announced their new Totally Unlimited plan with no annual contract or roaming charges starting from $79.99 per month.

Oh, how I shall miss Helio.

In light of this morning’s long expected announcement that Virgin Mobile had purchased Helio, a Q&A has gone up to answer some of the more pressing questions.

It’s all pretty straightforward: there will be no service interruption, new members are welcome, contracts are still valid, and they expect the Helio brand will eventually be dissolved.

HELIO and Virgin Mobile USA are teaming up to combine our strengths and deliver a better mobile experience. On June 27th Virgin Mobile USA announced that it had signed an agreement to acquire HELIO.

HELIO gains access to Virgin Mobile USA’s extensive distribution network and broad customer base, while Virgin Mobile USA gains access to HELIO’s exclusive, high-end devices and premium services. Both companies look forward to coming together to bring exciting prepaid and postpaid opportunities to their customers.

Q: What does this mean for current HELIO members? Can I still use my HELIO device, while keeping my HELIO service plan and number?

A: Current service plans will continue without interruption – it will be business as usual. HELIO members are at the center of this transaction and we’ll continue to bring them the innovative mobile services they’ve come to expect.

Q: Can new members still sign up for HELIO service?

A: Absolutely. HELIO will continue to offer exclusive, high-end devices and our innovative All-In plans.

Q: Will the HELIO brand be retained, or will everything migrate to Virgin Mobile USA?

A: Over time, we expect that all aspects of the customer experience will be integrated under the Virgin Mobile USA brand. Integration of the direct sales channel will begin immediately, and we expect that existing HELIO products and services will soon be offered through the Virgin Mobile USA website at www.virginmobileusa.com.

Q: So what’s next?

A: We’re excited by the possibilities our new, combined team offers. We have some big ideas, but as you can imagine, a little bit of housekeeping is in order before we share them. Stay tuned!

Q: Does this affect my current contract with HELIO in any way? When Virgin Mobile USA does acquire HELIO, can I end my current contract without paying an early termination fee (ETF)?

A: HELIO contracts remain in effect and unchanged by this transaction. HELIO members who wish to end their contract early will still be subject to an early termination fee (ETF).

Update after the jump

Just a few days ago the Financial Times reported that Virgin Mobile would absorb the Helio brand. As such, all Helio stores will shut their doors although we had heard the NYC store would stay open. It’s unclear what will happen to Helio’s employees, but it’s safe to say that most of them will be let go. The acquisition won’t go through until Q3, so the remaining Helio employees better start looking for a new gig ASAP if they haven’t already.

So what exactly does the merger mean for customers of Helio who have grown to love the hardware and features that Helio is best known for? Well, Virgin Mobile will be keeping all of those goodies in place. If you’ve seen any VM devices, you know they stink. VM is relatively boring and absorbing the technology Helio is best known for will certainly boost the MVNO’s status and appeal to a broader audience. That means future VM devices will include apps such as Google Maps with GPS, YouTube and MySpace… all of which Helio brought to the table before other carriers.

What about the Ocean 2? If you haven’t already figured it out by now, the Ocean 2 has been delayed over the last few months because of merger talks. It’s unclear when the device will actually launch, but it hasn’t been scrapped. Whether the device needs to go back to manufacturing to adjust the backlit Helio logo is unclear. VM just might release the device with some tag line like, “Virgin powered by Helio” to save money. But fear not, the Ocean 2 is still coming. The branding is unknown, though.

While I hate to see Helio dissolve, this is great for both brands. VM knows how to make money while Helio knows how to create technology that works and is appealing. It’s a win-win situation for the customers, but not so much for Helio employees. Let’s just hope VM doesn’t screw it up.

Q&A from Helio about the merger

HELIO and Virgin Mobile USA are teaming up to combine our strengths and deliver a better mobile experience. On June 27th Virgin Mobile USA announced that it had signed an agreement to acquire HELIO.

HELIO gains access to Virgin Mobile USA’s extensive distribution network and broad customer base, while Virgin Mobile USA gains access to HELIO’s exclusive, high-end devices and premium services. Both companies look forward to coming together to bring exciting prepaid and postpaid opportunities to their customers.
Q: What does this mean for current HELIO members? Can I still use my HELIO device, while keeping my HELIO service plan and number?

A: Current service plans will continue without interruption – it will be business as usual. HELIO members are at the center of this transaction and we’ll continue to bring them the innovative mobile services they’ve come to expect.
Q: Can new members still sign up for HELIO service?

A: Absolutely. HELIO will continue to offer exclusive, high-end devices and our innovative All-In plans.
Q: Will the HELIO brand be retained, or will everything migrate to Virgin Mobile USA?

A: Over time, we expect that all aspects of the customer experience will be integrated under the Virgin Mobile USA brand. Integration of the direct sales channel will begin immediately, and we expect that existing HELIO products and services will soon be offered through the Virgin Mobile USA website at www.virginmobileusa.com.
Q: So what’s next?

A: We’re excited by the possibilities our new, combined team offers. We have some big ideas, but as you can imagine, a little bit of housekeeping is in order before we share them. Stay tuned!
Q: Does this affect my current contract with HELIO in any way? When Virgin Mobile USA does acquire HELIO, can I end my current contract without paying an early termination fee (ETF)?

A: HELIO contracts remain in effect and unchanged by this transaction. HELIO members who wish to end their contract early will still be subject to an early termination fee (ETF).

Virgin Mobile purchased Helio today for $39 million in equity. Helio is a small MVNO that made its name by selling powerful and high-end telephones aimed at technophiles and, thanks to an investment by South Korea’s SK Telecom, Korean-Americans. As part of the deal, Virgin Mobile is also receiving $50 million to pay down Helio’s debt (half from SK Telecom, and half from its parent company Virgin Group), as well as an additional revolving credit facility of $60 million. Just last September, SK Telecom tried to save Helio by pouring an extra $270 million into it, to no avail.

The Helio brand will be subsumed by Virgin Mobile. All of the Helio stores will close except, it’s reported, the flagship store in New York, and there is a full restructuring of the company going on right now. Thus, after much struggling, Helio enters the deadpool.

Helio had 170,000 subscribers while Virgin Mobile currently has about 5 million. The deal will also give Virgin access to a number of technologies owned by Helio including customer management and cellphone deck applications.

Helio also has received investments from Earthlink, but when Earthlink pulled out last year and charismatic CEO Sky Dayton stepped down it was clear something was afoot.

Peter Ha at CrunchGear wrote a full analysis of the merger:

So what exactly does the merger mean for customers of Helio who have grown to love the hardware and features that Helio is best known for? Well, Virgin Mobile will be keeping all of those goodies in place. If you’ve seen any VM devices, you know they stink. VM is relatively boring and absorbing the technology Helio is best known for will certainly boost the MVNO’s status and appeal to a broader audience. That means future VM devices will include apps such as Google Maps with GPS, YouTube and MySpace… all of which Helio brought to the table before other carriers.

What about the Ocean 2? If you haven’t already figured it out by now, the Ocean 2 has been delayed over the last few months because of merger talks. It’s unclear when the device will actually launch, but it hasn’t been scrapped.

While I hate to see Helio dissolve, this is great for both brands. VM knows how to make money while Helio knows how to create technology that works and is appealing.

With Helio gone Boost Mobile in the only targeted MVNO running in the US right now.

The call starts at 11am eastern, 8am Pacific. Listen in live as Virgin and Helio describe their new partnership.

WARREN, N.J., June 27, 2008 – Virgin Mobile USA, Inc. (NYSE: VM), a leading national provider of wireless communications services, today announced that it has entered into an agreement to acquire Helio, a joint venture between SK Telecom and EarthLink, Inc. (Nasdaq: ELNK) providing highly advanced postpaid products and services with unique user applications. Under the terms of the agreement, Virgin Mobile USA will acquire Helio from SK Telecom and EarthLink for limited partnership units equivalent to 13 million shares of Virgin Mobile USA class A common stock, with a value of $39 million based on the closing price of Virgin Mobile USA’s class A shares on June 26, 2008.

The transaction is expected to close in the third quarter of 2008, subject to receiving regulatory approvals and satisfaction of other customary closing conditions.

Dan Schulman, Chief Executive Officer, Virgin Mobile USA, said, ”We believe that the acquisition of Helio and the related strategic investments by SK Telecom and Virgin Group are of enormous benefit to our business, both financially and strategically. The reduction of our long-term debt and the increase to our revolver will realign our capital structure, providing us with greater liquidity and increased flexibility to grow our business. At the same time, we will acquire an asset which will add to our scale, allowing us to reduce our network costs and assure that Helio’s customers are immediately profitable when brought on to our cost structure. We expect the combined elements of this deal will drive increased Adjusted EBITDA and free cash flow.”

Accelerating Virgin Mobile USA’s Growth
Upon closing, this transaction is expected to achieve a number of important steps for Virgin Mobile USA. Strategically, the acquisition of Helio allows Virgin Mobile USA to add a set of unique and differentiated data applications to its suite of products and services, greatly enhancing its offer across its customer base. Entry into the postpaid market will also give the Company access to approximately 140 million prospective customers1. Including reductions in Virgin Mobile USA’s network rates and an improved capital structure, this transaction is expected to be accretive to Adjusted EBITDA in 2008, excluding non-recurring transition costs, and to be accretive to Adjusted EBITDA and free cash flow in 2009.

With the acquisition of Helio, Virgin Mobile USA will gain an established and highly advanced postpaid billing and customer care platform. In addition, Helio has approximately 170,000 existing subscribers with an ARPU of approximately $80 and a handset inventory of approximately 85,000 units with a book value of approximately $17 million2. Acquiring Helio’s customers and expanding its offer portfolio is expected to increase Virgin Mobile USA’s volume of minutes and drive down the Company’s cost per minute under an amendment to its PCS Services agreement with Sprint (NYSE: S).

Schulman added, “This strategic acquisition integrates Virgin Mobile USA’s brand recognition, scale and extensive distribution with Helio’s accomplishments in advanced handset and content offerings. It provides us with a firm foundation to create a truly holistic, leading-edge product suite to service all of our existing and prospective customers. With about 20% of our disconnects currently going to postpaid products, we believe this new platform will be a powerful retention tool as we offer a unique and desirable postpaid alternative to our customers.”

Helio has been at the forefront in developing leading data services, in partnership with You Tube, Google and MySpace. Virgin Mobile USA will use this unique intellectual property to strengthen its competitive position in the prepaid, hybrid and postpaid markets while moving its handset lineup upmarket. Consequently, the Company expects to drive incremental growth in data revenues in the future.

Source: Nielsen Mobile, 2007. Total registered postpaid lines of 223 million; 60% spend less than $70 per month.
Helio Balance Sheet as of June 16, 2008. Fair value may be materially different upon fair value analysis post-close.
Strategic Investments Made at $8.50 per Share
Virgin Mobile USA also announced today that Virgin Group and SK Telecom will each invest $25 million of equity capital in the Company, creating an aggregate investment of $50 million. The investments will take the form of mandatory convertible preferred stock, convertible to Class A common stock at $8.50 per share, pending shareholder approval. The preferred shares will carry a four year maturity and a 6% annual dividend. Upon approval of Virgin Mobile USA’s shareholders, the preferred stock will convert into Class A common shares when the shares reach the conversion price or upon maturity.

Through its holding of limited partnership units and preferred stock, SK Telecom is expected to own the equivalent of approximately 17% of Virgin Mobile USA, and will take two seats on Virgin Mobile USA’s Board of Directors.

Jin Woo So, President, Global Business of SK Telecom said, “This transaction and our long-term, strategic investment in Virgin Mobile USA continue SKT’s strong momentum in the U.S. market, and will allow Helio and Virgin Mobile USA to realize significant synergies and strategic benefits. Virgin Mobile’s scale, strong brand power and expertise in prepaid with Helio’s leading technology, innovative services and experience in postpaid will together form a powerful new platform that will bring new value and flexibility to customers. We believe the strength of the business model will serve to enhance the value we built at Helio, and we look forward to a long-term partnership.”

Improved Capital Structure
Virgin Mobile USA intends to use the proceeds from these strategic investments by SK Telecom and Virgin Group to pay down a portion of its existing senior secured loan. SK Telecom and Virgin Group have also agreed to provide an additional $35 million and $25 million, respectively, to increase Virgin Mobile USA’s existing revolving debt facility, which will support the Company’s ongoing strategic growth. The additional revolver is expected to be used in part to fund debt and net working capital liabilities associated with restructuring and improving the efficiency of Helio’s ongoing operating costs, up to a maximum of $25 million. Following this additional investment, Virgin Mobile USA’s total revolving debt facility is expected to be $135 million. At close, approximately $15 million of the revolver is expected to be drawn to repay Helio’s outstanding debt and to fund one-time integration costs and transaction fees, resulting in an estimated undrawn balance of $75 million at close. The Company expects to use the revolver to fund up to an additional $10 million in restructuring and integration costs over the next 12 months, and for working capital as needed. Virgin Mobile USA intends to pay down $50 million of its existing senior secured loan upon close of the deal, which was approximately $269 million on March 31, 2008. Under the terms of its amended credit agreement, the margin on the outstanding balance of the senior secured loan will increase 100 basis points to LIBOR+550.

John Feehan, Chief Financial Officer of Virgin Mobile USA, said, “The strategic investments made by Virgin Group and SK Telecom will significantly improve the capital structure of our business by increasing our liquidity, and allow us to pay down $50 million of our senior secured loan. Combined with the Adjusted EBITDA accretion we anticipate, this reduction in debt will substantially increase our covenant headroom, while reducing our debt service on the senior secured loan by a net 17.7%. The improved capital structure, with the incremental cash flow we expect to generate, will provide us with a great deal more flexibility in funding the growth of the business and in servicing our debt.”

Operational Synergies and Improved Network Rates
Under the terms of the agreement, Helio will make significant cost reductions before the expected close of the transaction. Also after close, Virgin Mobile USA expects to make further improvements to Helio’s operating and customer acquisition expenses, through handset volume discounts and improving Virgin Mobile USA’s network rates through an amendment to its PCS Services agreement. In aggregate, Virgin Mobile USA anticipates Helio’s SG&A expense to be reduced by more than 70% by the end of 2008, with the majority of savings coming from the rationalization of distribution and headcount reductions. Virgin Mobile USA also expects to see significant cost savings as it centralizes the Helio offerings under the Virgin Mobile brand.

Virgin Mobile USA has also reached an agreement with Sprint to revise the terms of its existing network contract, and expects to achieve a minimum of an 8% reduction in its effective cost per minute in 2009, with further reductions over the next three years. Under the new amendment to the PCS Services agreement, Virgin Mobile USA’s cost per minute is tied directly to the volume of network traffic it generates, and will no longer be dependent on Sprint’s network costs. Virgin Mobile USA will achieve reductions to its per minute rate upon achieving certain targets for the volume of minutes used by its customers. This new volume discount structure allows Virgin Mobile USA additional flexibility in pricing, while substantially reducing the Company’s third-party risk. Additionally, effective July 1, 2008, Sprint will provide a $2.50 network usage credit to Virgin Mobile USA for each gross customer addition, with a cap at $10 million.

Top-Tier Customer Platform
SK Telecom and Helio have built a proprietary postpaid customer platform, with highly advanced web architecture. This platform features a broad range of fully integrated functionality for postpaid, prepaid and hybrid customer support, including real-time rating engine, billing platform, and credit review. It will allow Virgin Mobile USA to immediately enter the postpaid market, implementation for which on a stand-alone basis would require a minimum of 12 months.

Greatly Expanded Handset and Data Offerings
Helio has built its reputation by providing its approximately 170,000 customers with highly sophisticated data services, and Virgin Mobile USA will leverage these advanced applications along with Helio’s established postpaid platform, social networking content and feature-rich handsets to provide its customers with the latest in wireless products and services. This acquisition will allow Virgin Mobile USA to provide current and future customers with unique user applications on Sprint’s high speed EV-DO network, including Google maps with GPS, as well as integrated You Tube and MySpace applications.

WARREN, N.J., June 27, 2008 – Virgin Mobile USA, Inc. (NYSE: VM), a leading national provider of wireless communications services, today announced that it has entered into an agreement to acquire Helio, a joint venture between SK Telecom and EarthLink, Inc. (Nasdaq: ELNK) providing highly advanced postpaid products and services with unique user applications. Under the terms of the agreement, Virgin Mobile USA will acquire Helio from SK Telecom and EarthLink for limited partnership units equivalent to 13 million shares of Virgin Mobile USA class A common stock, with a value of $39 million based on the closing price of Virgin Mobile USA’s class A shares on June 26, 2008.

The transaction is expected to close in the third quarter of 2008, subject to receiving regulatory approvals and satisfaction of other customary closing conditions.

Dan Schulman, Chief Executive Officer, Virgin Mobile USA, said, ”We believe that the acquisition of Helio and the related strategic investments by SK Telecom and Virgin Group are of enormous benefit to our business, both financially and strategically. The reduction of our long-term debt and the increase to our revolver will realign our capital structure, providing us with greater liquidity and increased flexibility to grow our business. At the same time, we will acquire an asset which will add to our scale, allowing us to reduce our network costs and assure that Helio’s customers are immediately profitable when brought on to our cost structure. We expect the combined elements of this deal will drive increased Adjusted EBITDA and free cash flow.”

Accelerating Virgin Mobile USA’s Growth
Upon closing, this transaction is expected to achieve a number of important steps for Virgin Mobile USA. Strategically, the acquisition of Helio allows Virgin Mobile USA to add a set of unique and differentiated data applications to its suite of products and services, greatly enhancing its offer across its customer base. Entry into the postpaid market will also give the Company access to approximately 140 million prospective customers1. Including reductions in Virgin Mobile USA’s network rates and an improved capital structure, this transaction is expected to be accretive to Adjusted EBITDA in 2008, excluding non-recurring transition costs, and to be accretive to Adjusted EBITDA and free cash flow in 2009.

With the acquisition of Helio, Virgin Mobile USA will gain an established and highly advanced postpaid billing and customer care platform. In addition, Helio has approximately 170,000 existing subscribers with an ARPU of approximately $80 and a handset inventory of approximately 85,000 units with a book value of approximately $17 million2. Acquiring Helio’s customers and expanding its offer portfolio is expected to increase Virgin Mobile USA’s volume of minutes and drive down the Company’s cost per minute under an amendment to its PCS Services agreement with Sprint (NYSE: S).

Schulman added, “This strategic acquisition integrates Virgin Mobile USA’s brand recognition, scale and extensive distribution with Helio’s accomplishments in advanced handset and content offerings. It provides us with a firm foundation to create a truly holistic, leading-edge product suite to service all of our existing and prospective customers. With about 20% of our disconnects currently going to postpaid products, we believe this new platform will be a powerful retention tool as we offer a unique and desirable postpaid alternative to our customers.”

Helio has been at the forefront in developing leading data services, in partnership with You Tube, Google and MySpace. Virgin Mobile USA will use this unique intellectual property to strengthen its competitive position in the prepaid, hybrid and postpaid markets while moving its handset lineup upmarket. Consequently, the Company expects to drive incremental growth in data revenues in the future.

Source: Nielsen Mobile, 2007. Total registered postpaid lines of 223 million; 60% spend less than $70 per month.
Helio Balance Sheet as of June 16, 2008. Fair value may be materially different upon fair value analysis post-close.
Strategic Investments Made at $8.50 per Share
Virgin Mobile USA also announced today that Virgin Group and SK Telecom will each invest $25 million of equity capital in the Company, creating an aggregate investment of $50 million. The investments will take the form of mandatory convertible preferred stock, convertible to Class A common stock at $8.50 per share, pending shareholder approval. The preferred shares will carry a four year maturity and a 6% annual dividend. Upon approval of Virgin Mobile USA’s shareholders, the preferred stock will convert into Class A common shares when the shares reach the conversion price or upon maturity.

Through its holding of limited partnership units and preferred stock, SK Telecom is expected to own the equivalent of approximately 17% of Virgin Mobile USA, and will take two seats on Virgin Mobile USA’s Board of Directors.

Jin Woo So, President, Global Business of SK Telecom said, “This transaction and our long-term, strategic investment in Virgin Mobile USA continue SKT’s strong momentum in the U.S. market, and will allow Helio and Virgin Mobile USA to realize significant synergies and strategic benefits. Virgin Mobile’s scale, strong brand power and expertise in prepaid with Helio’s leading technology, innovative services and experience in postpaid will together form a powerful new platform that will bring new value and flexibility to customers. We believe the strength of the business model will serve to enhance the value we built at Helio, and we look forward to a long-term partnership.”

Improved Capital Structure
Virgin Mobile USA intends to use the proceeds from these strategic investments by SK Telecom and Virgin Group to pay down a portion of its existing senior secured loan. SK Telecom and Virgin Group have also agreed to provide an additional $35 million and $25 million, respectively, to increase Virgin Mobile USA’s existing revolving debt facility, which will support the Company’s ongoing strategic growth. The additional revolver is expected to be used in part to fund debt and net working capital liabilities associated with restructuring and improving the efficiency of Helio’s ongoing operating costs, up to a maximum of $25 million. Following this additional investment, Virgin Mobile USA’s total revolving debt facility is expected to be $135 million. At close, approximately $15 million of the revolver is expected to be drawn to repay Helio’s outstanding debt and to fund one-time integration costs and transaction fees, resulting in an estimated undrawn balance of $75 million at close. The Company expects to use the revolver to fund up to an additional $10 million in restructuring and integration costs over the next 12 months, and for working capital as needed. Virgin Mobile USA intends to pay down $50 million of its existing senior secured loan upon close of the deal, which was approximately $269 million on March 31, 2008. Under the terms of its amended credit agreement, the margin on the outstanding balance of the senior secured loan will increase 100 basis points to LIBOR+550.

John Feehan, Chief Financial Officer of Virgin Mobile USA, said, “The strategic investments made by Virgin Group and SK Telecom will significantly improve the capital structure of our business by increasing our liquidity, and allow us to pay down $50 million of our senior secured loan. Combined with the Adjusted EBITDA accretion we anticipate, this reduction in debt will substantially increase our covenant headroom, while reducing our debt service on the senior secured loan by a net 17.7%. The improved capital structure, with the incremental cash flow we expect to generate, will provide us with a great deal more flexibility in funding the growth of the business and in servicing our debt.”

Operational Synergies and Improved Network Rates
Under the terms of the agreement, Helio will make significant cost reductions before the expected close of the transaction. Also after close, Virgin Mobile USA expects to make further improvements to Helio’s operating and customer acquisition expenses, through handset volume discounts and improving Virgin Mobile USA’s network rates through an amendment to its PCS Services agreement. In aggregate, Virgin Mobile USA anticipates Helio’s SG&A expense to be reduced by more than 70% by the end of 2008, with the majority of savings coming from the rationalization of distribution and headcount reductions. Virgin Mobile USA also expects to see significant cost savings as it centralizes the Helio offerings under the Virgin Mobile brand.

Virgin Mobile USA has also reached an agreement with Sprint to revise the terms of its existing network contract, and expects to achieve a minimum of an 8% reduction in its effective cost per minute in 2009, with further reductions over the next three years. Under the new amendment to the PCS Services agreement, Virgin Mobile USA’s cost per minute is tied directly to the volume of network traffic it generates, and will no longer be dependent on Sprint’s network costs. Virgin Mobile USA will achieve reductions to its per minute rate upon achieving certain targets for the volume of minutes used by its customers. This new volume discount structure allows Virgin Mobile USA additional flexibility in pricing, while substantially reducing the Company’s third-party risk. Additionally, effective July 1, 2008, Sprint will provide a $2.50 network usage credit to Virgin Mobile USA for each gross customer addition, with a cap at $10 million.

Top-Tier Customer Platform
SK Telecom and Helio have built a proprietary postpaid customer platform, with highly advanced web architecture. This platform features a broad range of fully integrated functionality for postpaid, prepaid and hybrid customer support, including real-time rating engine, billing platform, and credit review. It will allow Virgin Mobile USA to immediately enter the postpaid market, implementation for which on a stand-alone basis would require a minimum of 12 months.

Greatly Expanded Handset and Data Offerings
Helio has built its reputation by providing its approximately 170,000 customers with highly sophisticated data services, and Virgin Mobile USA will leverage these advanced applications along with Helio’s established postpaid platform, social networking content and feature-rich handsets to provide its customers with the latest in wireless products and services. This acquisition will allow Virgin Mobile USA to provide current and future customers with unique user applications on Sprint’s high speed EV-DO network, including Google maps with GPS, as well as integrated You Tube and MySpace applications.

Let’s be honest. We’ve seen this coming for more than a month now and the Financial Times is reporting that VM and Helio could announce sometime this week that the two MVNOs will merge leaving SK Telecom with a 20 percent stake. There have been rumors floating around that Helio stores will shut their doors in an effort to cut costs, which we haven’t been able to confirm nor deny, but we’re pretty sure they’re true. We’re unsure which stores will close, but I’d like to think that the NYC store that’s 200 meters away from me will remain open. We’ll have to wait and see, though. Now that all this merger nonsense is over with, I’d like for Helio to release OZ2.

Reuters is also reporting on this matter. Sources say Helio will be absorbed into the Virgin Mobile brand. Maybe we won’t see OZ2 with the backlit Helio name. I guess I’m ok with Virgin.

It seems a video of the Ocean 2 was up last night, but that’s clearly not the case now since we can only provide a screen shot. Not a whole lot to glean from the Heliocity message board, but it appears the d-pad is touch sensitive and the “Helio” is backlit. Looking forward to this upgrade.

One thing we’ve been hearing a lot about is the new navigation pad. We hear alternately that it’s touch sensitive and non-touch, meaning you gesture above the pad and it reads your movements, which would one-up multitouch as a new technology.

This is apparently what the OZ2 looks like, very much like the current Ocean, which we’d heard, but we’re not totally convinced that’s the final form the phone handset will take. If all of these features are included, the OZ2 just might give the iPhone a run for its money.