Virgin eyes up Helio

The US MVNO market is still rocky and an announcement made late Wednesday suggests consolidation may lie ahead.

Virgin Mobile USA confirmed today that the company is in discussions with Korean carrier SK Telecom, which owns US MVNO Helio.

Virgin stressed that these discussions “are in early stages, and there are no assurances that any transaction will result”. The company also said it would make no further statement unless an agreement is reached.

Helio, a virtual mobile operator joint venture between Earthlink and SK Telecom, was launched in 2006, targeting the affluent youth and MySpace addicts. But the company has struggled to get the rich kids to part with their cash and Earthlink has scaled back its investment in the firm, with this latest move suggesting SKT is feeling the heat.

Aside from the fact they both piggyback on Sprint’s network, Virgin makes a good fit as a potential buyer of Helio. All of Virgin’s customers come from the typically cash strapped youth prepay demographic, so an acquisition of this sort would give Virgin something to build a postpay customer base from. While recognised as the most successful MVNO brand in the world, Virgin’s US operation has also been taking a hammering of late due to the economic downturn.

Traditionally, MVNOs have had an especially tough time of it in the US, with Disney, Amp’d and ESPN all calling it a day in the last 18 months or so.