Sprint acquires Virgin Mobile, looking to grow in prepaid phones

July 28, 2009 | Anthony Ha | Comments | |

virginmobileSprint announced today that it’s acquiring Virgin Mobile USA in an effort to bring on more customers for its prepaid mobile phones. The deal adds up to $483 million, including the 13.1 percent of Virgin that Sprint already owns.

Sprint says it will merge Virgin with its Boost Mobile prepaid phone division, and will put Virgin chief executive Dan Schulman in charge of its overall prepaid business. With the economy causing more people to be budget conscious (preferring to buy more minutes as they use their phones rather than committing to a specific plan), prepaid phones could see serious growth — and have already contributed to Sprint’s unexpectedly strong first quarter results.

Virgin Mobile, meanwhile, has been struggling to stay competitive in the prepaid market since its initial public offering in October of 2007. while the stock has bounced back a bit from its lows in late 2008 (boosted by today’s news, it’s currently trading at around $5.25), the company has still lost a lot of value in the last couple of years.

The deal is expected to conclude at the end of this year or the beginning of 2010.

Next Story: TV time holds steady against the Internet
Previous Story: New Sirf GPS technology means better mobile navigation devices coming soon

Bookmark and Share

Tags: ,

Photo of Anthony Ha

About the Author, Anthony Ha

Anthony is VentureBeat's assistant editor, as well as its reporter on enterprise technology, cloud computing, and tech policy. Before joining VentureBeat in 2008, Anthony worked at the Hollister Free Lance, where he won awards from the California Newspaper Publishers Association for breaking news coverage and writing. He attended Stanford University and now lives in San Francisco. Reach him at anthony@venturebeat.com. You can also follow Anthony on Twitter.

  • I think this is a pretty bold move--it will help them acquire a bunch of current subscribers, which could help the company. It's all about subscribers at this point, since the plan prices are pretty low. $50 for unlimited use is pretty lowball. But look for a lot of add-ons and things being sold directly through the phone and additional to the service. It's looking like it's going to (or may) move to a "monetizing traffic" situation in some regards.

    But man, you can find some good deals on prepaid right now. thanks prepaid price war!
  • bronze
    I hope sprint brings back virgin's cool factor. I'm a student and I recently heard about a $10 120 minute deal that virgin's offering to people that qualify for welfare. This is going to have a huge effect on a huge portion of the perceptions of the current Virgin mobile customer base, who are students that the deal is not being offered to. People are going to think that their prepaid payments are subsidizing this welfare deal and are not gonna be happy. Sprint needs to get Virgin focusing on keeping their existing customer base or they'll loose a lot of us to competing prepaid providers! Good luck Sprint...