LONDON—The mobile virtual network operator (MVNO) business model has arrived in the United States.
Sprint and Sir Richard Branson’s Virgin Group officially announced their teaming, a saga that has been in the works for several years. Virgin Mobile USA will offer its popular pay-as-you-go wireless service targeted at the 15- to 30-year-old consumer market using Sprint’s CDMA network. The new nationwide operator expects to launch its services in select markets and complete a nationwide rollout during the first half of next year.
“Combining the clarity and coverage of the Sprint PCS nationwide network with a powerful youth-oriented brand like Virgin is expected to add users to our network and effectively capture an even larger portion of the relatively untapped market of young wireless users,” said Charles E. Levine, Sprint’s president.
Virgin Mobile USA said it will offer long distance and nationwide coverage, as well as its Virgin Xtras service, a wireless data service “tailored for the U.S. consumers’ fast-paced, entertainment-focused, music-centric lifestyle,” according to the companies’ release.
Under terms of the agreement, Sprint and Virgin will initially have an equal interest in and mutual governance roles for Virgin Mobile USA. Sprint PCS will make a $50 million contribution to the joint venture and Virgin will invest $50 million in cash. The Virgin Mobile USA board of directors will include leaders from both companies, including Levine and Branson.
The announcement ends months of speculation as to how Virgin would enter the U.S. wireless market. Virgin began shopping for a U.S. partner early last year. In June, Sprint confirmed it was in talks with the British giant. The MVNO business model has been springing up in other parts of the world for the past year, mostly in Europe.
