Virgin Territory
When I wrote about the virtues of prepaid MVNOs a few weeks ago, I did not know that Virgin Mobile was about to file to go public. I’ve been reading their Form S1 and it seems to confirm what I said, both good and bad. The good news is that prepaid is the fastest growing segment of the market and Virgin has been able to acquire customers much more cheaply than the major carriers: they have no retail stores and they spend only $10 on advertising for each new subscriber versus $100 for Verizon. The bad news is that competition is intense – monthly churn is 4.8% versus 1.2% for Verizon – and despite having almost 5 million customers, Virgin Mobile USA has yet to turn a profit and has racked up over $500 million in debt.
More commentary on the mobile market in this week’s Carnival of the Mobilists, hosted by Dorrian Porter (CEO of another mobile startup, Mozes).