Virgin Concentrates on Mobile Service
Following the recent announcement that it will be terminating its online music store. Virgin announced yesterday that it will turn its mobile phone business public with an IPO.
Virgin Mobile is a joint venture between Virgin Group and Sprint Nextel Corp that has been providing a pay-as-you-go service since 2002. The service is generally geared toward a younger consumer group, and has seen decreased competition recently with the bankruptcy of Amp'd Mobile announced in the beginning of June.
The goal of Virgin's IPO is to repay $150 million of debt under its senior secured credit facility, and $45 million it owes to Sprint Nextel. Following a $36 million net loss in 2006, Virgin Mobile turned around and made a $26.5 million profit after the six months ending in June 2007. Revenue for that six-month period totaled $666.9 million.
The net proceeds of this IPO are estimated to reach between $375.6 million and $467.5 million.
Last week, the company unveiled its new 3jam "SMS 2.0" service, which will become the first multi-party text messaging system offered in the United States. Since its soft launch in September 2006, the service has shown great promise, garnering hundreds of thousands of monthly users.