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Virgin Mobile USA Closes Acquisition of Helio
Posted: 23-Aug-2008 [Source: Virgin Mobile USA]

[Virgin Mobile's acquisition of Helio offers improved network rates from Sprint for Virgin Mobile USA.]

Warren, NJ -- Virgin Mobile USA, Inc., a leading national provider of pay-as-you-go wireless services, today announced that it has completed its acquisition of Helio, a joint venture between SK Telecom and EarthLink, Inc. that complements Virgin Mobile USA's strengths through its specialization in highly advanced postpaid products and services. The acquisition was completed based on the terms and conditions outlined in Virgin Mobile USA's June 27, 2008 press release. All necessary regulatory approvals have been obtained.

In connection with the acquisition, Helio shareholders SK Telecom and EarthLink and have received limited partnership units and shares equivalent to 13 million shares of Virgin Mobile USA Class A common stock, with a value of $38 million based on the average closing price of Virgin Mobile USA's Class A shares, as of two trading days before and two trading days after the date of announcement. In addition, SK Telecom and Virgin Group will each invest $25 million in Virgin Mobile USA for preferred shares.

Dan Schulman, Chief Executive Officer, Virgin Mobile USA, emphasized the benefits of the transaction to Virgin Mobile USA and the new opportunities for growth it creates. "Adding Helio's differentiated postpaid offer to Virgin Mobile USA's existing portfolio will expand both our market opportunity and our ability to deliver new products and services more rapidly," he said. "We believe this transformative transaction will bolster our leading position in the wireless space, and enable us to provide customers with whatever they need in wireless, always with our focus on great value, flexibility and customer service. We look forward to revealing our roadmap for expanded, innovative offers in the near future.

"This acquisition of Helio also comes with a number of financial benefits, including improved network rates from Sprint for Virgin Mobile USA, and strategic investments by SK Telecom and Virgin Group which improve our capital structure and increase liquidity," Schulman said.

Schulman said that the transaction provides Virgin Mobile USA with:

-- a set of unique and differentiated data applications;

-- entry into the postpaid market, with a sophisticated billing and customer care platform;

-- approximately 170,000 Helio customers;

-- revised terms for the Sprint PCS Services Agreement expected to result in an 8% reduction in the Company's effective cost per minute in 2009;

-- reduction in net debt of approximately $35 - $40 million, through the investments of $25 million each by SK Telecom and Virgin Group in the form of preferred mandatory convertible stock at the price of $8.50 per share;

-- an increase to Virgin Mobile USA's total revolver from $75 million to $135 million, through additional commitments of $25 million by Virgin Group and $35 million by SK Telecom; and

-- the addition of SK Telecom as a strategic shareholder with two seats on the Company's Board of Directors.

A percentage of the equity issued and issuable in the transaction will be subject to escrow for one year to secure certain indemnification obligations. Additional information is available at http://investorrelations.virginmobileusa.com/.

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