According to Helio / Helio powered by SK Telecom, the Hollywood MVNO is "on the path to surpass 100,000 subscribers by early in the second quarter of 2007" (NB : 10 month after launch) and claims an "ARPU of over $100 per month", 25% of which from data services. The proof of concept for their device driven innovation strategy reads in some interesting figures :
- a WAP penetration of over 85%, an average 400 SMS per customer (merry Xmas - those were the stats for December 2006 so you won't get any data regarding the recent launch of Helio Music) - over 70% of Helio members use MySpace Mobile
- over 80% of Helio Drift members have downloaded GPS-enabled Google Maps™ for mobile and about 70% have downloaded Buddy Beacon
According to Earthlink's 10-K, Helio Inc as well as Helio LLC (the opco) are Delaware corporations. This isn't Tinsel Town and the balance sheets are not unleaded. Up to now, each partner has spent $214M in cash and non cash assets ($40M for Earthlink's 27,000 wireless subscribers transferred in 2005, along with equipments and other assets). Each partner will spend 6 more millions in August but beyond that, there is a big question mark.
One thing is sure : the company will keep losing money for a while. Big time, because this is cellular business and even for a M-VNO with a low CAPEX, S curves tend to develop fat bellies. FYI, 2006 revenues reached $46.58M with a full launch in July (68.7% service, 31.2% equipments and other) and accumulated deficit stood at $233.7M. Provided ARPU remains at the same high-usage-low-hanging-early-adopter level, 100,000 subs would mean $120M, and an average customer base of 150,000 over the year would barely match 2006 OPEX ($186.5M). Not only does EY have "substantial doubt about the Company’s ability to continue as a going concern", but even a massive success of HELIO would only make things worse in the short term (acquisition costs).
SK Telecom and Earthlink own each 47.8% of the operation. Earthlink can't afford losing money at this pace for long, and SK Telecom could seize the opportunity to take a clearer lead. Or to bring in one ov'em "potential outside investors" (up to now, "outside investors" represented "approximately $8.0 million of funding").
At this stage and especially after the recent US-Korean FTA, I don't see SKT pulling the plug that early. Even with such a fierce competition, it wants HELIO to "achieve or maintain adequate market share or revenue or compete effectively". One one hand, we should see more "Helio powered by SK Telecom" (MySpace's exclusivity is over and the Cyworld brand could blossom beyond the platform). On the other, SKT won't wait 25 years to welcome HELIO's 3 millionth customer.
The fun is just about to start.