In July 2007, SK Telecom and Earthlink were planning to invest up to $100m each to help the loss-making mobile venture. For the quarter ended September 2007, Helio reported a net loss of $92.3 million on revenue of $51.7 million. According to Earthlink, SK Telecom’s additional investment in Helio will help the MVNO to grow. Earlier, EarthLink had provided Helio with a $30m loan to cover day-to-day operations but now it does not plan to invest any more money in Helio.
In September, SK Telecom revised its investment figure to approximately $200m to expand Helio’s subscriber base through handset and service development and marketing activities.
Helio was launched in 2006 as a mobile virtual network operator (MVNO) targeting the young and technology-savvy customers in the US market. It uses the wireless infrastructure of Sprint Nextel to deliver voice and video messaging and mobile internet surfing.
Many large enterprises such as 7-Eleven, Virgin and Sprint Nextel have adopted the MVNO model to target niche market segments that are not catered by larger mobile operators. 7-Eleven chain of convenience stores offers low-cost voice-only service on pay-as-you-go basis and ESPN targets the young sports-watching male. In addition, Virgin Mobile focuses on the teenage audience who shop in its music stores.
Some MVNOs have been facing financial problems such as Amp’d Mobile which filed for Chapter 11 bankruptcy in the US and owes approximately $100m to creditors such as Verizon Wireless, Motorola and MTV Networks. In addition, Disney incurred a $30m loss from its MVNO Mobile ESPN, and soon discontinued its MVNO service.
Source: ComputerWire daily updates
