Sprint pays $483m for a bit of Virgin territory

End of road for pay-as-you-go MVNO

Posted in Mobile, 28th July 2009 15:53 GMT

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Sprint has snapped up Virgin Mobile USA, folding the brand into its own in exchange for stock that values the operation at $483m.

Not that Sprint will have to raise quite that much: the operator already holds 13.1 per cent of Virgin Mobile USA, as well as being the network on which the MVNO* is hosted. Sprint also runs the Boost Mobile brand, which up until now was a competitor of Virgin Mobile.

Virgin Mobile USA has well over five million subscribers, and has been making money. Sprint reckons that once the deal is completed, it will be able to settle the debts and use the customer base to increase its own prepaid operations.

While prepaid mobiles have revolutionised mobile telecommunications in Europe, the Americans have been much less inclined to hand over cash in advance, despite the advantages of not requiring credit checks (or, more importantly, credit worthiness).

Virgin launched on the premise of anonymous mobile phones (no registration was required) and free-to-receive text messages, both of which were real differentiators back in 2002, and have contributed to the significant market share that Sprint is now able to enjoy. ®

* Mobile Virtual Network Operator - a brand camped on someone else's network.

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