EarthLink Takes a Step Back From Helio
EarthLink confirmed Friday that its partner in Helio, SK Telecom, had agreed to invest up to $270 million in the wireless venture.
The new funds will help bail out Helio, and relieve EarthLink of its responsibility to fund the company. The move is likely a part of the ISP's overall strategy to cut or eliminate spending in areas where return is not substantial.
It is not immediately clear how these changes will affect the overall ownership structure of Helio. However, the two sides are currently in negotiations to discuss how the change in investment would affect the agreement in place.
"We are very pleased that with SK Telecom's funding, Helio will be able to move forward with its innovative business plan without the need for further investment by EarthLink, while continuing to allow our company to have a substantial ownership interest in Helio's future," president and CEO Rolla Huff said in a statement.
EarthLink had already invested some $220 million in the project, and expected to invest as much as another $50 million. However, the venture has been losing money at a high rate, and it was dragging down the ISP's overall results.
Helio is expected to report a $340-360 million net loss for the full year. It currently has about 130,000 subscribers, and expects to add another 70,000-120,000 before the end of the year.