In Earthlink‘s earnings call, they unearthed some usage numbers for US MVNO Helio, the joint venture between Earthlink and South Korea’s SK Telecom. And, despite the fact that Helio still seems to burn through cash rather quickly, these numbers do not look too bad:
– Helio’s ARPU was more than $85 a month compared to an industry average of under $50.
– Its users average more than 550 text messages a month, and instant message penetration is 3x the industry average.
– A whopping 95% of Helio customers access the web through their mobile devices (industry average: c. 13%.
– In December, Helio’s users uploaded photos from their devices to the web at a rate 5x of the industry average.
But then came the bad bit: Helio finished the quarter with just over 180,000 subs, which is a 28% growth rate over the prior quarter, but its revenues of $56 million may be an increase of 147% over the prior year but only 8% over the prior quarter. That means their top-line growth was not matched by their bottom-line one, quite to the contrary. The available news do not shed light onto why that is so but it is concerning as it means that they do either not have their costs under control (expending more per added user than per previously existing one) or they have a serious CPA problem: if the margin per incremental user gets slimmer, they may have to spend more to recruit them. Not healthy…
Because Earthlink has pulled out of additional funding requirements for Helio, the burden rests on SKT’s shoulders. For how much longer is anyone’s guess although, to be fair, SKT has shown a pretty healthy amount of patience in this.
