I'm sure Sir Richard Branson will do something risque.
The brash entrepreneur behind one of the U.K.'s most popular brands, the Virgin Group, is known for pulling dramatic stunts at launches of subsidiaries or new products. I can only imagine what the ringing of the opening bell will be like on the day of Virgin Mobile USA's IPO on the NYSE.
With an S-1 filing to the SEC, Virgin Mobile USA -- a joint venture between Virgin Group and Sprint Nextel (NYSE:S) -- committed to an initial public offering in hopes of raising $100 million from investors. After years of rumors about a pending IPO, investors finally get a peek at this upwardly mobile market virgin.
Virgin Mobile USA is one of the first mobile virtual network operators (MVNO) to spring up in the United States over the last several years. MVNOs do not actually build out or operate their own network, instead leasing bandwidth from established players like Verizon (NYSE:VZ) or AT&T (NYSE: T). Other popular MVNOs include Disney (NYSE:DIS) Mobile, America Movil's (NYSE:AMX) Tracfone Wireless, and Helio, a partnership of Earthlink (NASDAQ:ELNK) and SK Telecom (NYSE:SKM).
Following Virgin's popularity as a cellular service provider in Britain, the company partnered with Sprint in 2002 to replicate the success on its network here in the states. So far, the company has done exceptionally well at signing up customers for its simple, pay-as-you-go service, reporting a total of 4.88 million U.S. customers as of March 31, 2007.
Even with a healthy subscriber base, the company has yet to turn a profit, posting a net loss of $36.7 million in 2006. That said, the company has shown steady improvement, since its most recent loss pales in comparison to those of 2004 ($173.8 million) and 2005 ($102.9 million). As the business scales up, the cost outlay per subscriber drops. In theory, that eventually leads to profitability.
With intense competition for wireless customers always a concern, though, Virgin Mobile's growth prospects are certainly not guaranteed. A low-cost wireless provider, Virgin Mobile's average revenue per user is only a little more than $21 per month, and it's been steadily declining. It will take some more austere efforts from the company to live up to what is sure to be a flamboyant debut.
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Fool contributor Dave Mock pushes the limits of social acceptance by flaunting his bare ankles on occasion. He owns no shares of companies mentioned here. Disney is a Stock Advisor recommendation. SK Telecom is a Global Gains recommendation. Dave is the author of The Qualcomm Equation. The Fool disclosure policy stays prim and proper 24/7.
