Friday, June 27, 2008

More Trouble for Sprint - Virgin Mobile Buys Helio

Another blow for Sprint. Virgin Mobile, one of Sprint's largest PCS resellers, is purchasing rival wireless provider Helio. The buy out will give Virgin Mobile access into the postpaid wireless market.

Virgin Mobile also will revise the terms of its network contract with Sprint Nextel and expects at least an 8 percent reduction in the effective cost per minute for it to use Sprint's network in 2009, with further reductions in the next three years. Sprint also will provide a $2.50 network usage credit to Virgin Mobile for each gross customer addition, capped at $10 million, effective Tuesday.

After losing two other major wholesale customers, Embarq and Qwest, Sprint looking at three years of falling per user revenues from one of their biggest clients isn't going to help the company's future outlook.

1 comment:

Anonymous said...

Lowering their wholesale cost will hurt, but I was under the impression that Virgin was buying Helio to get their own network. I did not realize Helio is just a mobile virtual network operator who uses Sprint's network like Virgin. So Sprint will now deal with one entity for billing instead of two which probably explains some of the requests for the cost reduction.