Movida turns out the lights: Spanish language MVNO files for bankruptcy protection

If MVNOs had a theme song, it would probably be “Another One Bites the Dust.”
Movida Communications Inc. filed for Chapter 11 bankruptcy this week in a Delaware court, blaming a “costly and restrictive” mobile virtual network operator agreement with Sprint Nextel Corp. for its demise.
The Hispanic-focused MVNO had been operating since 2005 and provided pay-as-you-go voice and data access with an emphasis on international and Spanish-language content and service.
The company sold its wares in 45 states and had more than 267,000 customers as of early March. The company said it had 75 employees, both at its Kansas City headquarters and scattered around the nation.
According to the bankruptcy filing, Movida had been able to grow its business but was “recently plagued by a combination of increased competition in the industry and the restrictive and costly terms of its MVNO agreement with Sprint Nextel. In particular, during the months preceding this filing, competitors . drastically reduced the price of handsets. [Movida], whose operations are inextricably tied to its usage of the Sprint network, has been unable to participate in the latest wave of handset promotions due to the low margins resulting from the costly and restrictive terms of its MVNO Agreement . [and its] ability to attract new customers has been significantly impaired.”
The filing went on to state that Movida had attempted to renegotiate the agreement with Sprint Nextel in order to avoid a liquidity crisis, but was unsuccessful. The company started considering options including a sale of its business, sale of its assets, a piecemeal liquidation and a wind-down of its operations. The company also asked the court to allow it to end a number of service contracts since it is now winding down its business – including the Sprint Nextel MVNO agreement – with an end date of April 1.
Movida joins the ignoble ranks of a number of failed MVNOs. High-end MVNO Voce was the most recent casualty, and the list includes Amp’d Mobile, XE Mobile, Disney Mobile and Mobile ESPN.
According to the filing, the company’s top three creditors are Sprint Nextel, which is owed nearly $16 million; Brightstar U.S. Inc., owed about $4.8 million; and Telcordia Technologies, which is owed about $680,000.