Virgin Mobile USA filing for IPO

[Barry]

Virgin Mobile USA filed for an IPO suggesting somebody can do things right in the MVNO segment of the wireless market in the US. Virgin Mobile said that it has applied to have its stock listed on the NYSE under the symbol “VM.” Although the company said that “the number of shares to be offered and the price range for the offering have not yet been determined,” a variety of media outlets reported that the IPO could raise up to $100 million.

The firm said it will use the proceeds from the IPO to repay debt and to make an undisclosed payment to Sprint Nextel Corp.

Lehman Brothers, with Merrill Lynch & Co. and Banc of America Securities acting as joint book- running managers, are handling Virgin Mobile’s IPO.

Sprint Nextel and Virgin Group are selling portions of their stakes in the firm. Albeit, Sprint Nextel and Virgin Group together will continue to hold a majority of voting power “and will continue to control us.”

In its filing with the SEC Virgin Mobile released detailed information on its business. The firm, founded as a joint venture between Sprint Nextel and the Virgin Group, launched service in July 2002. By November 2003, the MVNO had racked up 1 million customers. As of Dec. 31, Virgin Mobile counted 4.57 million customers, a 19% increase from the 3.84 million customers it served as of Dec. 31, 2005.

Virgin also boasted of its data sales. Virgin Mobile said that 17% of its service revenues for 2006 were from non-voice services, which the firm said was 5% higher than the wireless industry average of 12%, according to the Yankee Group. They recorded operating revenues in 2006 of $1.1 billion, up from around $990 million in 2005. The MVNO posted a $36.7 million loss in 2006, down from the $102.9 million loss in 2005.

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