Virgin Mobile expects to report losses for 2007
February 5, 2008
Virgin Mobile sells its own brand of phone service over Sprint Nextel Corp.’s wireless network
Although Virgin Mobile USA’s number of subscribers is increasing, the wireless unit of Virgin Group expects to report losses for 2007.
The company reported expected losses to be between $3 million and $6 million for the year. It expects earnings from operations of $95 million to $100 million, almost double the 2006 result, CEO Dan Schulman said in a statement.
“We believe that sustainable, disciplined customer acquisition will result in higher return on investment and growth over the long term,” Mr. Schulman said.
“Throughout the fourth quarter and holiday season, Virgin Mobile USA made the strategic decision not to participate in the practice of aggressive handset pricing at the $5.99 level. Our experience tells us that this temporary, aggressive pricing can produce poor customer economics.”
Virgin Mobile sells its own brand of phone service over Sprint Nextel Corp.’s wireless network. The company offers wireless service, data content and products without forcing customers into annual contracts.
The company added 210,000 customers in the fourth quarter and finished the year with 5.1 million subscribers. It will report its actually fourth-quarter results in March.
Virgin Mobile expects 5.1 percent churn rate for the fourth quarter and a 4.9 percent churn rate for the entire year.