Helio and Virgin Mobile merger on the cards

RUMOURS HAVE resurfaced that Virgin Mobile USA will swallow SK Telecom's Helio, causing some analysts to doubt the viability of MVNOs (Mobile Virtual Network Operators).

The INQ would argue that it's just another sign that the US cellular industry is consolidating. MVNOs seem to work quite well in the UK, for example.

In a recent UK customer satisfaction survey from JD Power, two MVNOs came out on top – Tesco Mobile and Virgin Mobile UK.

There's considerable synergy between Helio (a joint venture between Korea's SK Telecom and US ISP Earthlink) and Virgin Mobile USA because both piggyback on Sprint's Cdmaone based network.

Analyst Lee Shi-hoon with Hyundai Securities has been quoted as saying, " Virgin Mobile USA has a scale and Helio has strong services, so the combination can work."

Fierce price competition in the States has just caused Virgin Mobile to introduce a price plan with unlimited calls for only $79.99 per month so that it can still undercut bigger rivals such as Verizon Wireless and its own host network, Sprint Nextel.

Focussing on the youth market like Helio is also pretty popular in the UK, too. MVNO, Blyk, is claiming its annual member targets of 100,000 were reached six months ahead of schedule. So it is now going to expand into the Netherlands , Germany, Spain and Belgium.

That doesn't sound like the MVNO model is dead at all. µ

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