ATLANTA—Mobile virtual network operator Helio L.L.C. cost parent EarthLink Inc. $13.3 million in losses last quarter, according to EarthLink’s second quarter earnings report—and EarthLink said it expects those losses to widen over the coming quarters.
For the third quarter of 2006, EarthLink said, it expects an “equity method loss of $20 million to $25 million attributable to EarthLink’s proportionate share of the losses of the Helio wireless joint venture.”
For the full year of 2006, EarthLink expects its proportionate share of Helio’s losses to be between $75 million and $85 million. Helio is a 50-50 joint venture between EarthLink and Korean company SK Telecom and was founded with a pledge of $440 million in combined funding from the two companies.
The MVNO launched in early May with two exclusive handsets.
EarthLink’s chief executive officer, Garry Betty, said that in the second half of the year Helio intends to expand its distribution and marketing efforts. Helio kicked off a traditional media campaign earlier this week with television, radio and print ads as well as billboards.
Although the MVNO has not made any customer numbers public, analysts have taken the view that the company’s recent tweaks to its pricing options—including the addition of a lower-cost, all-inclusive entry plan at $65 per month, new a la carte options and the ability to add another line to an account for $10 per month—have been an attempt to generate more interest and momentum for the brand. Helio’s plans, which include unlimited data services, start at the $65 price point and range as high as $135 monthly for 2,500 anytime minutes. Its handsets cost between $200 and $275.
According to SK Telecom, Helio is expected to have 3.3 million customers and $2.4 billion in annual sales by 2009.
