Virgin Mobile the MVNO which just reported its earnings earlier this week, is in talks with the much smaller and troubled MVNO Helio, we have learned, even as other PE and strategic players are still circling both the companies. Helio is now controlled by SK Telecom (NYSE: SKM), after Earthlink (NSDQ: ELNK) stopped making further investments, and has been looking at options to either exit or grow. For VMUSA, as we have mentioned, some PE players have been looking at investing in the company or buying it outright, and even if the VMUSA-Helio deal comes through, the two could use some extra cash. It is no secret that MVNO carriers Helio and Virgin Mobile have seen better days. Helio has burned through its investments multiple times, and Virgin Mobile is not doing too much better. Both have had a very difficult time gaining subscribers. SK Telecom is now considering options for its U.S. venture, and one of them may include a potential merger with Virgin Mobile.

The deal would have SK Telecom dropping the cash, which would be used to buy out Virgin Mobile. Virgin Mobile would then purchase Helio in an all stock transaction. Both of the MVNO carriers are using Sprint’s network, so in theory, customers would be able to bring their existing equipment to the table of the new entity.

SK Telecom, who is the largest carrier in Korea, has been looking for ways to increase their presence in the U.S. Initially, Helio was a joint venture between Earthlink and SK Telecom, but Earthlink dropped out of the deal, after Helio did not perform as well as expected. When asked about the rumors, CEO Dan Schulman would not give a straight answer, but did hint at possible acquisition of another MVNO.

[Source]