By Brian Dolan

Virgin Mobile USA bought youth-oriented MVNO Helio for a measely $39 million in equity--but a $50 million investment from Virgin Mobile parent company Virgin Group and Helio parent company SK Telecom ($25 million each) made digesting Helio at that pricepoint all the more satisfying. As Virgin swallows the last high-profile, content-centered MVNO in the U.S. it has reaffirmed its position as the only true MVNO to make it in the U.S. market.

According to an interview Moconews recently had with Virgin Mobile USA CEO Dan Schulman, Helio could not be profitable under its deal with Sprint unless it achieved $80 in monthly ARPU. "The network deal that Helio had with Sprint was on a per subscriber basis and for them to have a shot at profitability, really forced them to focus on the very highest users," Schulman told Moconews. "And our network structure is a much more flexibly one with Sprint, and our network costs are much lower on a per unit basis, as a result, we are going to be able to target a much wider segment of the market--really the sweet spot of the prepaid market in the $40 to $70 range."

Helio will add 170,000 subscribers to Virgin Mobile USA and each of them have an ARPU around $80. THe MVNO also brings about 80,000 handset units to Virgin and an advanced platform that will continue to enable strong ARPU if Virgin continues to uphold Helio's services. Schulman estimated that it would cost between $20 million and $25 million for Virgin to build Helio's postpaid platform from scratch. There are plenty of difficult changes ahead, though: SK Telecom is now a 17 percent stakeholder in Virgin Mobile USA; Virgin needs to decide how many of Helio's employees it needs to lay off; and managing another reseller agreement could prove taxing on Virgin.

Pali Research analyst Walter Piecyk believes the latter to be the most daunting: "It always concerns us when companies move out of their comfort zone with a new strategy," Piecyk wrote in a recent research note. "Particularly one as challenging as wireless resale. The unlimited rate plans and high end phones that Helio sells are now competing with unlimited rate plans recently launched by the major operators and high end phones like the iPhone, Blackberry and Instinct that are not available on Helio."

Here lies: Mobile ESPN, Disney Mobile, Amp'd, Helio. R.I.P. 

Poll: Last week we asked our readers whether the enterprise side or the consumer side of the mobile internet opportunity would be bigger five years from now. Some 88 percent of our readers voted for the consumer side, while only 12 percent believed the enterprise side would be bigger. This week we wonder simply: Was buying Helio a smart move on Virgin Mobile USA's part? Yes or No. Feel free to send me a note to explain your answer: bdolan@yankeegroup.com