Cash-burning “virtual” wireless carrier Helio just got a much-needed pledge of support from Korean wireless giant SK Telecom, which co-owns the company with Atlanta-based Internet service provider EarthLink (ELNK). SK Telecom says it will invest up to $270 million more in Helio. But Earthlink, which is busy retooling its struggling business, is not following suit, which means the JV is getting overhauled and SK will become the majority owner.
Helio plans to use the money to develop new phones, make more content deals, and market its service. To date it has gone through $460 million, and has a commitment for another $270 million from SK. It will need it: Even after cutting 100 jobs last month, the company expects to lose between $340 million and $360 million this year on $140 million to $170 million of revenue.
Operationally, Helio is better shape. Its customers spend an average $90-$100 per month on wireless service, twice the industry average. Helio ended August with 130,000 subscribers, and now expects to finish 2007 with between 200,000 and 250,000 subs. Assuming it hits somewhere in the middle, its monthly revenue will be around $21 million — an annual run rate around $250 million.