Who Would Buy Helio?


“Virtual” wireless carrier Helio is burning cash, shaking up its staff, and missing growth projections. Yesterday, we said the company might be on the block “sooner than later.” We didn’t realise that meant “now.”

Valleywag’s Owen Thomas reports the wireless upstart has hired Goldman Sachs, presumably to put itself up for sale. But who wants to buy Helio? (Update: A source close to the company says Helio has had Goldman on board “for a long time.”)

The most logical acquirer would be Sprint Nextel, whose network already powers Helio’s service. Sprint suffers from a massive lack of “cool,” and Helio can help there. Sprint has no iPhone, missed out on the Razr during its peak, and its youth-focused Boost Mobile brand runs on Nextel’s archaic walkie-talkie network.

Helio comes with 180,000 subscribers that pay an average $85 monthly bill — almost 50% more than Sprint’s long-term-contract customers spend. It also comes with a lineup of really cool phones, including the custom-built Ocean. But Sprint Nextel has had massive problems of its own: Huge customer losses, new management turnover, and skittish investors. Interesting side note: Late last year, Sprint turned down a financing offer from SK Telecom, Helio’s majority owner.

Verizon Wireless runs a similar network using the same “CDMA” technology, and could also be interested. Like Sprint, it has no iPhone, and could use some cool, new handsets. Unlike Sprint, it’s profitable and growing, so it’s in a much better position to swallow the service.

Other than that, though, we’re stumped. We can’t see the appeal for a PE firm, given that the MVNO business model doesn’t work. And we can’t think of other strategic buyers (OK, if we really stretch, we can imagine someone like Best Buy; last year the retailer spent $97 million to acquire Speakeasy, a broadband Internet provider). Any other ideas?