Sprint buys out Virgin’s US MVNO business

US mobile virtual network operator Virgin Mobile USA is to be acquired by hosting partner Sprint Nextel for around $483m.

Virgin Mobile USA piggybacks on the Sprint network, targeting the US prepaid consumer sector, and has amassed more than five million customers.

Sprint said the addition of the Virgin Mobile brand complements its own Boost Mobile MVNO business, which is also focused on the prepaid market. Boost had over three million subscribers as of June 30, and the company said that both brands will continue to exist, serving existing and prospective customers.

Under the deal Sprint, which already owns 13.1 per cent of Virgin Mobile USA, will buy out Virgin’s own 28.3 per cent stake, SK Telecom’s 15.3 per cent and the publicly held 43.3 per cent stake. In addition, Sprint will retire all of Virgin Mobile USA’s outstanding debt, which is expected to be no more than $205m on September 30, 2009.

Virgin will continue to license the Virgin brand from to Sprint for $12.7m through to the end of 2021.

Sprint’s prepaid business will now be led by Dan Schulman, currently Virgin Mobile USA’s chief executive officer, who will report directly to Dan Hesse, Sprint Nextel president and chief executive officer. Matt Carter will continue to lead Boost Mobile and will report to Schulman.