Virgin CEO: economic woes to continue into 2009

21 May 2008

The chief executive of cellular reseller Virgin Mobile USA says that problems with the US economy are having a knock-on effect on his business and he expects this to continue well into 2009. Speaking at the Reuters Global Technology, Media and Telecoms Summit, Dan Schulman said a survey of subscribers showed that 50% more people are facing financial difficulties as compared to a year ago. Virgin acts as a mobile virtual network operator (MVNO), targeting low and middle-income consumers with low-cost pre-paid products, and it is these users who are cutting down on mobile usage as they tighten their belts. Schulman says there is some flexibility in his company’s cost structures which would allow it to reduce tariffs. While he also confirmed that Virgin is in negotiations with SK Telecom, the Korean telco which controls rival US MVNO Helio, Schulman declined to comment on recent speculation that the firms are discussing a merger. He did say, however: ‘I do believe you’re going to see continued consolidation in this industry. That should not be surprising to anybody. Over the long term networks are commodities … What you need is more and more scale and more and more cost efficiencies.’

United States