SK Telecom announced today that it signed an agreement on June 26 (EDT) to exchange full shares of Helio, owned by SK Telecom’s subsidiary SKT USA Holdings, into a stake in Virgin Mobile USA. In addition, SK Telecom will also make a strategic investment of $25 million in Virgin Mobile USA, becoming the mobile virtual network operator(MVNO)’s second largest shareholder owning the equivalent of approximately 17% of total shares. With this agreement, SK Telecom will take two seats on Virgin Mobile USA’s board.

With the agreement signed, the two companies expect to expand subscriber base, reduce network cost, share distribution channels, and offer high value added services and handsets to establish a mutually beneficial business model. 

SK Telecom expects the deal will produce various benefits for its U.S. business such as advantages from the powerful brand recognition of Virgin Group. At the same time, this deal will enable customer service at customer points of contact across the U.S., providing a very positive turnaround for SK Telecom’s U.S. business strategy.

Virgin Mobile USA forecasts Helio’s advanced handsets and data service will allow the company to attract new customers from whom it can create greater revenue. In particular, it would adopt Helio’s sophisticated customer platform to expand to the postpaid mobile service market. It would offer new solutions for Virgin Mobile USA to deliver growth out of the highly competitive prepaid market, both drawing new customers with high credibility and preventing existing customers from moving to other postpaid carriers.

SK Telecom said the agreement is very meaningful as it is a strategic decision of the two companies to improve competitiveness in the U.S. wireless market. With the larger subscriber base, the new entity will offer high value added data service and become a total telecom carrier with postpaid and prepaid services.

Upon signing the agreement, Helio and Virgin Mobile USA will start the transaction and expect to gain approval from the U.S. Federal Communication Committee by the third quarter of this year.

Jin Woo So, President, Global Business of SK Telecom said, "This transaction and our long-term, strategic investment in Virgin Mobile USA continue SKT’s strong momentum in the U.S. market, and will allow Helio and Virgin Mobile USA to realize significant synergies and strategic benefits.  Virgin Mobile’s scale, strong brand power and expertise in prepaid with Helio’s leading technology, innovative services and experience in postpaid will together form a powerful new platform that will bring new value and flexibility to customers. We believe the strength of the business model will serve to enhance the value we built at Helio, and we look forward to a long-term partnership."

Dan Schulman, Chief Executive Officer, Virgin Mobile USA, said, "This strategic acquisition integrates Virgin Mobile USA’s brand recognition, scale and extensive distribution with Helio’s accomplishments in advanced handset and content offerings. It provides us with a firm foundation to create a truly holistic, leading-edge product suite to service all of our existing and prospective customers."