Helio, the mobile phone service provider, is getting ready to announce a new round of firings this week, a source close to the matter tells us. These layoffs are expected to include senior level officials within the company.
[Update: Spokeswoman Brooke Hammerling has responded, saying the rumors are “totally false.”]
This rumor follows Earthlink founder Sky Dayton’s resignation as chief executive of Helio, at the end of last month, and continued evidence company is losing money and shows no sign of stopping the flow or red ink.
Earlier today Helio announced it was significantly lowering the price of its unlimited plan from $145 a month down to $99. While this action alone would seem to be in line with its South Korean parent SK Telecom’s plans to expand Helio’s customer base, when coupled with the job cuts, one can’t help but wonder if another Voce Wireless situation could be just around the corner.
Helio is a so-called MVNO, or a network that uses the infrastructure of other carriers to offer their services. MVNO’s have had a poor track record. Amp’d Mobile crashed last year into bankruptcy, and mobile networks from ESPN and Disney have also failed. Meanwhile, the premium MVNO Voce drastically slashed its prices in the months leading up to last Friday when the company’s service suddenly went out and now appears to have joined the MVNO graveyard.
Helio did, however, receive a $70 million injection from SK Telecom in November. With the investment, SK Telecom gained controlling rights in the company, versus Earthlink.
That $70 million was said to be part of a promised $100 million investment announced in July (see our coverage; scroll down) — another cash injection that became necessary after the company’s continued losses. The company had already soaked up $440 million, and said last year it expected a net loss of $330 million to $360 million, compared with a $192 million shortfall in 2006.
In September SK Telecom announced they would be willing to add another $100 million on top of it all, for both handset development and to expand its customer based worldwide.
How long can these cash injections continue?
We’ve separately heard that Helio may fare better than its erstwhile rivals due to its strategic relationship with SK Telecom — Helio can get cheaper handsets from SK Telecom than rivals could buy cheap handsets from non-strategic manufacturers.