Since its launch in July 2002, the Warren, New Jersey-based company has grown rapidly, and at March 31, had 4.88 million customers. It provides its services on the nationwide Sprint PCS network at a price based on Sprint Nextel’s cost of providing these services plus a specified margin under an agreement that runs through 2027. Virgin said that as a result, it is able to dedicate resources to acquiring and servicing customers rather than to acquiring spectrum or building and maintaining a wireless network.
The two key factors that distinguish it from many of its competitors are its focus on the 14-to-34 age range and pay-as-you-go segments of the market and its MVNO business model. The company said its stylish and affordable handsets and its voice and data service offerings which include ringtones, text, instant and picture messaging, and email and entertainment content, are designed to appeal to the youth market.
In the year to December 31, Virgin Mobile cut its net loss from $102.9m to $36.7m on revenue 3% higher at $1bn. Not only has growth slowed down, but monthly ARPU fell from $22.54 to $21.48 and the churn rate was up from 4.3% to 4.8%.
Virgin said its primary competition comes from national and regional wireless communications providers, including AT&T, Verizon Wireless, T-Mobile, Sprint Nextel, Metro PCS, and Cricket. It said it also faces competition from resellers and MVNOs including TracFone Wireless, Helio, and Amp’d.
In addition, some of the major internet search engines and service providers such as Google have announced plans to enter the mobile marketplace by providing free internet and voice access through a fixed wireless network in partnership with some major municipalities in the US. Other potential competitors are mobile satellite service providers.
