Helio slimming down: Four of five retail outlets closed, more cuts expected
August 14 2008 - 2:24 pm ET | Allie Winter | RCR Wireless News
Comment on this story
Helio's New York retail location remains open.
Just a month and a half after Virgin Mobile USA Inc.’s announcement to acquire Helio L.L.C., all but one of Helio’s five retail stores have already closed. The New York location remains open, for now, while stores in San Diego, Santa Monica and Palo Alto, Calif., and Denver have closed, confirmed Helio spokesperson Rick Heineman.
The stores closed within the past month or so. As for the New York store, Heineman said nothing is definite.
“We do not have a time table other than for it to be open right now,” Heineman said. “When the deal closes, [it’s] up to Virgin Mobile.”
As for the employees at the shuttered stores, Heineman said some were let go and some stayed on to work with Virgin Mobile USA. The move aligns with Virgin Mobile USA’s plan to cut down Helio’s staff from 570 to 200 employees.
Online changes
Helio’s Web site is also looking a little different. The link to the company’s retail locations has — not surprisingly — disappeared, and a new link about the future Helio/Virgin Mobile USA relationship is available. However, because Helio phones and services are still available, the site allows visitors to enter a ZIP code to find third-party retailers that provide Helio service.
Virgin Mobile USA, which is planning to shell out $39 million for the fellow MVNO, said the acquisition should close in the third quarter. Jayne Wallace, spokeswoman for Virgin Mobile USA, did not comment on the store closings.
“Any activities taking place pre-close are driven by Helio,” Wallace said.
When asked whether the Helio name would disappear, Wallace wouldn’t provide specifics. However, Helio indicates on its Web site that “over time, we expect that all aspects of the customer experience will be integrated under the Virgin Mobile USA brand.” The Web site also says Helio contracts will not be interrupted and, if customers want out, early termination fees still apply.
Just in time
When the deal closes, Virgin Mobile USA stands to gain Helio’s 170,000 customers, which come at a good time for the company. Virgin Mobile USA reported a loss of 111,273 customers during the second quarter, almost double the 53,424 customers it lost during last year’s second quarter. When discussing Helio, Daniel Schulman, Virgin Mobile USA’s CEO, said the carrier still has some kinks to iron out before the acquisition finalizes.
“Helio is contractually required to cut their costs by approximately 70% before the deal closes and they are on track to do this,” Schulman said. “We hope to close the deal in the next few weeks.”
August 17, 2008 07:10 pm
The $39 million dollar price tag you show Virgin paying is a complete misnomer. Virgin gives up 20% of their stock (a paper transaction) in exchange for $25 million cash from SK Telecom, 85,000 in phone stock, 170,000 customers locked into enforceable contracts, the postpaid customer computer platform that VM lacks and additionally another $35 from SK towards a revolving debt facility. An interesting customer count will be Virgins 1Q 2009. We will see if after several months of postpaid plan sales whether they have more than 170,000 still under contract or not.SK paid a dear price to get two seats on the VM USA board. Earthlink slinked into their 3% with only the loss of their initial multi hundred million investment in the failed MVNO.As VM stock is now worth $123 million in total the actual value of the SK holding is $20.91 million and the Earthlink holding is $3.69 million. They are not allowed to sell for 18 months. This was SK not wanting their half billion dollar Helio loss to look like a total loss even if they had to lose more. What a disaster.
August 14, 2008 02:38 pm
With Virgin Mobile taking over is the great customer service that Helio provided going to diminish? I was a long time Helio customer and one of its first customers they provided excellent service as well as great telephone technology.I had lost my job and stopped my service I was going to use thier service again but know I am not sure.