Mobile IPOs: Virgin vs MetroPCS

Alternative cellular brands are storming the public markets. In April it was flat-rate carrier MetroPCS, which raised over a billion dollars in an IPO, while rival Leap Wireless is trading high at $77.27 per share. Now Virgin Mobile, jointly owned by Richard Branson’s Virgin Group and Sprint, filed for its own IPO, and is reportedly seeking to raise up to $100 million.

Will Virgin Mobile’s public move match the success of MetroPCS and Leap Wireless? Not likely. Virgin uses the MVNO model, running service over Sprint’s network and doesn’t own its own spectrum or retail outlets. The company is also still not profitable, which is something that no doubt boosted MetroPCS’s stock, and has an average revenue per user (ARPU) that is roughly half of MetroPCS’s. Virgin Mobile has been rumored to IPO for years and Business Week even wrote in February that the clock was ticking back then. Here’s a primer on the contrasts between Virgin Mobile and MetroPCS:

Virgin Mobile

  • Subscribers: 4.88 million
  • IPO: reportedly raising up to $100 million (likely to change)
  • Launched: July 2002
  • Annual revenues 2006: $1.1 billion
  • Net loss: $36.7 million
  • churn 4.8%
  • ARPU: $21.48 (monthly)
  • CPGA: $120.55 (cost of acquiring a new customer)
  • Business Model: MVNO, runs over Sprint. Doesn’t own spectrum or retail outlets.

MetroPCS:

  • Subscribers: 3.4 million
  • IPO: Raised $1.15 billion
  • Launched: 2002
  • Annual revenue 2006: $1.55 billion
  • Net income: $53.81 million
  • Churn: 4.6%
  • ARPU: $42.98 (monthly)
  • CPGA: $117.58 (cost of acquiring a new customer)
  • Business Model: The company owns licenses that cover a population of 140 million, and recently spent $1.4 billion on licenses
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