SK Telecom takes the reins as Helio nets $270M: EarthLink bows out

Mobile virtual network operator Helio L.L.C. has received a fresh commitment of funds from South Korean co-parent SK Telecom, to the tune of $270 million. The funding does not include a matching commitment from Helio’s other owner, EarthLink Inc.
EarthLink said it is in discussions with SK Telecom to “amend their existing agreements to reflect the additional investment by SK Telecom and their future governance of Helio.” EarthLink said no further details would be released until the agreements are completed.
Helio had been founded as a 50/50 joint venture between the two companies.
“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,” said EarthLink president and CEO Rolla Huff. “We believe this is good news for EarthLink shareholders, and is consistent with our statements over the past two months.”
EarthLink’s stock was up almost 3% on the news to around $8.18 per share.
Helio, a high-end MVNO targeting tech-savvy youth, burned through $40 million a month in the second quarter. Helio’s full-year 2007 losses are projected to fall between $340 million to $360 million, on revenues of $140 million to $170 million. The MVNO, which also serves the Korean-American niche with its “Helio powered by SK Telecom” brand, ended August with 130,000 subscribers and expects to have gained a customer base between 200,000 and 250,000 by the end of the year.
Helio to date has raised close to $800 million from its parent companies.
EarthLink’s withdrawal from Helio comes as little surprise; late last month the company announced a restructuring that included cutting 900 jobs.
And, although the two companies operate separately, Helio made its own cuts of around 100 positions in a move that the company said was to bring its costs in line with its stage of maturity, plus focus more intently on specific markets.