Tuesday, 25 August 2009

FCC approves Sprint buyout of Virgin Mobile – USA

The Federal Communications Commission has given regulatory approval to Sprint Nextel in its buyout of Virgin Mobile USA. The approval means that there is little now stopping Sprint absorbing Virgin Mobile, with the latter now losing its MVNO status as it becomes a brand of Sprint. The deal also sees Sprint take over Helio, which had been bought out by Virgin Mobile. Helio is a data orientated mobile service which targets the value added services and mobile content market, a venture which failed as a stand alone MVNO as it failed to attract enough users.

Virgin Mobile will still retain its identity and separate management team to provide Sprint with this channel to the youth market. As a business division Virgin Mobile now retains 100% of the revenue it produces as it no longer has to purchase minutes of use off Sprint to act as an MVNO. This should see the loss making business become a positive contributor to Sprint Nextel’s accounts.