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Virgin Mobile USA Completes Helio Acquisition

Warren, N.J. — Virgin Mobile USA has completed its acquisition of Helio, which was jointly owned by SK Telecom and Earthlink.

The deal provides Virgin Mobile USA entry into the postpaid market

The nearly $40 million deal closed according to the

In connection with the acquisition, Helio shareholders SK Telecom and EarthLink have received limited partnership units and shares equivalent to 13 million shares of Virgin Mobile USA Class A common stock, valued at $38 million. SK Telecom and Virgin Group will also each invest $25 million in Virgin Mobile USA for preferred shares.

“Adding Helio’s differentiated postpaid offer to Virgin Mobile USA’s existing portfolio will expand both our market opportunity and our ability to deliver new products and services more rapidly,” said Dan Schulman, Virgin Mobile USA CEO. “We believe this transformative transaction will bolster our leading position in the wireless space, and enable us to provide customers with whatever they need in wireless, always with our focus on great value, flexibility and customer service. We look forward to revealing our roadmap for expanded, innovative offers in the near future.

According to a release, Schulman expects his company to gain a number of benefits from the acquisition including:

a set of unique and differentiated data applications;

entry into the postpaid market, with a sophisticated billing and customer care platform;

approximately 170,000 Helio customers;

revised terms for the Sprint PCS Services Agreement, expected to result in an 8 percent reduction in the company’s effective cost per minute in 2009;

reduction in net debt of approximately $35 – $40 million, through the investments of $25 million each by SK Telecom and Virgin Group in the form of preferred mandatory convertible stock at the price of $8.50 per share;

an increase to Virgin Mobile USA’s total revolver from $75 million to $135 million, through additional commitments of $25 million by Virgin Group and $35 million by SK Telecom; and

the addition of SK Telecom as a strategic shareholder with two seats on the Company’s Board of Directors.

The release stated a percentage of the equity issued and issuable in the transaction will be subject to escrow for one year to secure certain indemnification obligations.

terms announced earlier this summer