The upstart MVNO has barely gotten its bearings, but word is that Helio is already going through some financial trouble. The joint venture set up between SK Telecom and Earthlink was designed to provide users with higher-end multimedia mobile phones (like the powerful Helio handset) in a package that was fun and affordable.
It turns out it costs the company “300 dollars to sign up each new subscriber”, and as such, it will take them quite some time before they can recoup that expense. Because part of Helio’s appeal is high speed data, SK Telecom and Earthlink invested heavily into using Sprint’s EV-DO networks, as much as 50% of the initial cost, in fact. It cost the companies a total of $440 million dollars to get off the ground, with the two partners going Dutch on the deal – to speak – splitting the bill down the middle.
Well, they’re running out of funds (if they haven’t already) to establish their sales networks, and they’re turning back to the parent companies for more. According to one source, “The problem is that the parent companies are likely to be reluctant to additional financial inject even before the launch of the service (sic).”