Helio: How To Lose Half A Billion Dollars In Three Years

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We’ve been wondering how “virtual” wireless carrier Helio could lose $560 million in three years, with only 180,000 subscribers to show for it. Now, via corporate parent EarthLink’s (ELNK) annual report to the SEC, we know.

Last year, Helio booked $171 million in revenue: $115 million came from selling mobile phone service and another $56 million from selling phones and accessories. Cost of sales: $168 million, including $71 million on wholesale airtime and $97 million on equipment. This leaves them $3 million — a 2% margin.

But then there’s another $332 million (!) of operating expenses — including $160 million spent on sales and marketing, $99 million spent on operations and member service, and $66 million spent on general and administrative costs. Net loss: $327 million.

At the end of 2007, Helio had $45.1 million in cash. EarthLink, once a 50/50 partner in the venture, stopped throwing in more money last year. But majority owner SK Telecom (SKM) has said it will give Helio at least another $270 million if necessary, and has already cut a check for $20 million this month. How long will that last?

See Also:
Helio: $560 Million In The Hole
Who Would Buy Helio?
Helio Re-Org: CFO, Three Execs Out
Sky Dayton Out As Helio CEO, Growth Stalling

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