WARREN, N.J. - Virgin Mobile USA Inc. said Wednesday it is in preliminary talks with South Korea's SK Telecom Co. about possible "strategic options," a phrase that usually suggests a buyout or major investment.
Shares of Virgin Mobile rose 33 cents, or 11 percent, to close at $3.37 after initially jumping 47 percent on the news.
The U.S. wireless unit of Richard Branson's Virgin Group, which went public at $15 per share last October, said the talks are in early stages and it will have no further comments until a deal is reached.
SK Telecom is South Korea's largest mobile phone service operator by subscriber numbers. It's also the majority owner of Helio LLC, another U.S. cell-phone company, which could be combined with Virgin Mobile. Helio spokesman Rick Heineman confirmed that SK Telecom, Virgin Mobile and Helio are all in discussions.
Virgin Mobile had 5.1 million customers at the end of March, making it one of the largest U.S. "mobile virtual network operators," or MVNOs. Rather than owning their own network, MVNOs buy wholesale airtime from other carriers. Virgin Mobile uses the Sprint Nextel Corp. network, as does Helio.
Virgin Mobile specializes in marketing prepaid plans and postpaid plans without contracts to younger customers.
Last week, Virgin Mobile's stock tumbled after it posted lower first-quarter earnings and said it expects to lose between 130,000 and 160,000 net subscribers in the second quarter.
Helio started out in 2006 as joint venture of EarthLink Corp. and SK Telecom. Its aim was to bring the sophisticated features of Korean phones to the U.S., but the venture has had a slow start. It January, it said it had "nearly" 200,000 subscribers.
A number of other companies have tried the MVNO business model, and success stories are few. Amp'd Mobile, ESPN Mobile and Disney Mobile have all shut down.
Shares of Virgin Mobile rose 33 cents, or 11 percent, to close at $3.37 after initially jumping 47 percent on the news.
The U.S. wireless unit of Richard Branson's Virgin Group, which went public at $15 per share last October, said the talks are in early stages and it will have no further comments until a deal is reached.
SK Telecom is South Korea's largest mobile phone service operator by subscriber numbers. It's also the majority owner of Helio LLC, another U.S. cell-phone company, which could be combined with Virgin Mobile. Helio spokesman Rick Heineman confirmed that SK Telecom, Virgin Mobile and Helio are all in discussions.
Virgin Mobile had 5.1 million customers at the end of March, making it one of the largest U.S. "mobile virtual network operators," or MVNOs. Rather than owning their own network, MVNOs buy wholesale airtime from other carriers. Virgin Mobile uses the Sprint Nextel Corp. network, as does Helio.
Virgin Mobile specializes in marketing prepaid plans and postpaid plans without contracts to younger customers.
Last week, Virgin Mobile's stock tumbled after it posted lower first-quarter earnings and said it expects to lose between 130,000 and 160,000 net subscribers in the second quarter.
Helio started out in 2006 as joint venture of EarthLink Corp. and SK Telecom. Its aim was to bring the sophisticated features of Korean phones to the U.S., but the venture has had a slow start. It January, it said it had "nearly" 200,000 subscribers.
A number of other companies have tried the MVNO business model, and success stories are few. Amp'd Mobile, ESPN Mobile and Disney Mobile have all shut down.
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