Virgin Mobile inside the numbers, part 1

As Virgin Mobile prepares for its initial public offering, I've been looking through its S1 registration statement. Being the first MVNO to go public in the US, Virgin's S1 opens up an entirely new window to what we know about the MVNO business.

And the first thing to do is to offer a mea culpa. After an MVNO post that I did in May, a reader sent me the following note:

John - I've read your blog. I'm surprised to find you pushing MVNOs. Are any MVNOs aside from Tracfone making money?

Here's my response:

To your question, while there's not much publicly available data on MVNO profitability, I'd wager that Virgin Mobile and Boost are highly profitable.

And my reader, giving me lots of opportunity to backpedal, wrote back, in part:

I don't believe Virgin is yet profitable, though to be honest, I don't follow the industry at all....

Well, it took 30 seconds of looking at the S1 to realize that my reader, who doesn't follow the industry at all, was right, and I was way wrong. Not only is Virgin Mobile not "highly profitable," it is not profitable at all. In its best year, 2006, Virgin lost $37 million on revenue of $1.1 billion.

Fred, time to square up on our wager. Tell me where to send the check.

Tomorrow: looking at Virgin's lifetime customer value

(Photo by rasidk via stock.xchng)

mvno ipo stock offering profitability