Virgin and Sprint target young US mobile market

British entrepreneur Richard Branson sees an underdeveloped mobile phone market in America. About 40% of people in the United States have wireless telephones, compared with roughly 70% in Europe. The Virgin brand is already well established in with Virgin Atlantic Airways, retail music and a soft drink, and now Branson is moving into the American wireless market.

Sprint and the Virgin Group have formed a joint venture to offer pay-as-you-go wireless communications services and handsets to the U.S. market under the Virgin Mobile brand using Sprint PCS' all-digital, all-PCS nationwide wireless network. The formation of Virgin Mobile USA through the joint venture creates a new national wireless service provider targeting the 15- to 30-year-old consumer market in the U.S. Virgin Mobile USA expects to launch its services in select markets and complete a nationwide rollout during the first half of 2002.

"Virgin's strategic venture with Sprint enables Virgin Mobile USA to be the first Mobile Virtual Network Operator (MVNO) in the U.S.," said Branson, chairman of the Virgin Group. "We are the fastest growing mobile phone business in the U.K., and we will leverage our strong brand recognition as well as our consumer-savvy marketing machine to satisfy the needs of a U.S. market that demands customization."

Pay-as-you-go

Branson said Virgin Mobile USA will cater to a target market of young Americans between the ages of 15 and 30 by providing simple, all-inclusive, pay-as-you-go wireless communications services and diminishing the responsibilities of monthly bills and credit applications. According to The Strategis Group, the 15- to 19-year-old wireless consumer market is projected to increase 184% by 2007, and the 20- to 29-year old wireless consumer market is expected to increase 93% during the same timeframe.

"We are extremely pleased to partner with the Virgin Group," said Charles E. Levine, President of Sprint PCS. "Their focus on pay-as-you-go wireless service for young Americans under the age of 30 should allow Sprint PCS to quickly and cost effectively penetrate this market segment in a way that is complimentary to our efforts."

Virgin Mobile USA's products and services will include long distance and nationwide coverage as well as Virgin Xtras, a distinctive set of features that will provide access to additional services tailored for the U.S. consumers' fast-paced, entertainment-focused, music-centric lifestyle.

Premier retailers

Virgin Mobile USA's products and services will include long distance and nationwide coverage in addition to Virgin Xtras, a set of features that will provide access to additional services tailored for U.S. consumers. Virgin products and services are expected to be distributed nationally through premier retailers that focus on servicing the under 30 consumer market.

Under terms of the agreement, Sprint PCS and Virgin will initially have an equal interest in and mutual governance roles for Virgin Mobile USA. Sprint PCS will make a $50 million contribution of services to the joint venture and Virgin will invest $50 million in cash.

The Virgin Mobile USA board of directors has six members, three from Virgin. They are: Branson, Virgin Group Strategy Director Gordon McCallum, Virgin USA CEO Frances Farrow, Sprint's Levine, Sprint PCS Chief Financial Officer William Gunter and Sprint PCS Vice President of Business Development and Planning, Bill Blessing.

Virgin, a leading branded venture capital organization, is one of the most recognized and respected brands. The company claims a 96% consumer awareness in Britain and is becoming a global brand name. Virgin is involved in mobile phones, travel, financial services, fitness and leisure, soft drinks, music, holidays, cars, wines and publishing.

Power of Virgin name

According to a company statement, once a Virgin company is up and running, several factors contribute to making it a success: the power of the Virgin name, Sir Richard Branson's personal reputation, Virgin's management style, empowering employees to flourish within the group as well as the Company's unrivaled network of friends, contacts and partners. Virgin companies are a part of a family rather than a hierarchy. Each entity is empowered to run its respective affairs, yet Virgin companies function as a community with shared ideas, values, interests and goals. Virgin has created more than 200 companies worldwide, employing more than 25,000 people. Revenues around the world in 1999 exceeded $5 billion.

With 80,000 employees worldwide and $23 billion in annual revenues, Sprint is widely recognized for developing, engineering and deploying state of the art network technologies, including the first nationwide all-digital, fiber-optic network in the US. 

Last week, Sprint PCS and Samsung Telecommunications America (STA) launched the SPH-N300, America's first GPS-enabled wireless phone. The Sprint PCS SPH-N300 by Samsung is designed to support future location-based and E911 emergency services, as they become available on the Sprint PCS nationwide network but works today nationwide as a Sprint PCS Phone. 

In the future, the GPS technology will  enable enhanced location-based services that could include applications such as driving directions, traffic services, and locating and planning for local entertainment.