Virgin mobile USA loses 85% in share price

Sir Richard Branson’s Virgin Mobile USA has lost $250 million (£124 million) after an 85% collapse in the company’s share price since its flotation last October. Last October, shares were priced at $15 but have recently dropped as low as $1.90.

Furthermore, poorer than expected fourth-quarter results caused the mobile phone operator’s share price to fall a further 41% last week.

As a result, analysts have cut its ratings on the stock market from a peer performer to an underperformer.

Virgin Mobile USA was set up in the summer of 2002 as a joint venture between Virgin Group and Sprint, the US telecoms company. It sells only prepaid mobile phones, which are popular among young people who cannot afford a contract.

However, competition is fierce for mobile phone companies in the US, which is reflected in Virgin Mobile USA’s failure to expand to the extent of the Virgin Media brand’s other companies.

Dan Schulman, Chief Executive Officer at Virgin Mobile USA, was positive and said we think we have one of the most attractive value propositions in the market and that our business is well-positioned for the future.

We will continue to simplify and evolve our product and service offers to better serve our more than 5 million customers and to generate increased demand, concluded Mr Schulman.

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