Virgin Mobile closes $38M Helio acquisition

WARREN, N.J. 

Virgin Mobile USA Inc. said Friday it completed its acquisition of struggling cellular carrier Helio LLC for $38 million in stock.

Under the terms of the buyout, announced June 27, Helio owners EarthLink Inc. and SK Telecom, a South Korean carrier, received limited partnership units and shares equivalent to 13 million shares of Virgin Mobile USA stock.

SK Telecom and British billionaire Richard Branson's Virgin Group also will each invest $25 million in Virgin Mobile as part of the deal, giving SK Telecom a 17 percent stake in Virgin Mobile.

"This acquisition of Helio also comes with a number of financial benefits, including improved network rates from Sprint for Virgin Mobile USA, and strategic investments by SK Telecom and Virgin Group which improve our capital structure and increase liquidity," said Dan Schulman, Virgin Mobile's chief executive.

The Helio deal brings about 170,000 new customers to Virgin Mobile, the company said.

Both Virgin Mobile and Helio use Sprint Nextel Corp.'s network, which makes the integration of the two businesses possible. Virgin Mobile said the better network rates will reduce effective cost per minute by 8 percent in 2009.

SK Telecom will be granted two seats on Virgin Mobile's board.

Helio was not a publicly traded company, so data on its financials have been scant, but it has contributed to losses at EarthLink.

Shares of Virgin Mobile dipped 3 cents to $2.69 in midday trading.