Virgin Mobile USA pines for postpaid success

Virgin Mobile USA Inc. showed more enthusiasm toward its newer, postpaid offerings in its second-quarter report – not the normal behavior for a company that made its name with prepaid. When asked about average revenue per user (ARPU) results related to its recently launched “Totally Unlimited” plan, Dan Schulman, CEO at Virgin Mobile USA, said it’s too early to release numbers, but he expects it to make a big difference in ARPU going forward.
However, Schulman said what’s more important is that gross adds were up 47% on monthly, postpaid plans overall.
“Those are much higher ARPU than our prepaid,” Schulman said. “If that continues you’ll see a much larger base on our monthly (postpaid) plans.”The second quarter was a busy one for Virgin Mobile USA. The mobile virtual network operator announced near the end of the quarter its new unlimited monthly plan that officially launched on July 1, and also announced plans to acquire rival MVNO Helio L.L.C. for $39 million. Since the announcement Helio has closed the majority of its six retail stores, with the New York location the only site still open. Helio phones and plans, however, can still be purchased through third-party retailers. Virgin Mobile USA said it expects to close the deal during the third quarter of this year.
As for Virgin Mobile USA’s second quarter, overall gross adds were down 7% to 728,000, which the company attributed to its distribution roll out at Wal-Mart taking longer than anticipated. Virgin Mobile USA said the outlet should be up and running by the third quarter.
The company reported disappointing numbers in other areas as well. Net income for the quarter dropped to $3.5 million, almost half of the $7.1 million Virgin Mobile USA posted during second quarter of last year. The company’s overall ARPU was down slightly, from $20.97 last year to $19.32. Virgin Mobile USA also reported a wider loss of customers compared with the same quarter a year ago: 111,273 customers lost this year compared with 53,424 customers lost during the second quarter of 2007.