Be Smart

If it wasn't for Verizon's sterling financial performance lately, you'd have to wonder whether there's something about CDMA that sucks finances straight out of carrier's wallets.  Not only is Sprint suffering a major cash-flow crisis, but things over at network MVNO Helio are looking to be pretty precarious too.  Certainly not to the extent of Sprint - writing off $30bn in a quarter is pretty tough to beat - but the niche carrier is certainly at a junction point of sorts.  Helio made $171m in revenue in 2007 while losing $327m, adding up to a total $560m debt over three years; however, that revenue beat, by a million, the company's own predicted takings, while the loss was under their $340-360m prediction.  Year on year growth was also promising, as revenue increased 264-percent while loses increased 70-percent.

And when you actually look through the carrier's figures, you'll see that debt figures even in the most profitable accounts book.  Verizon may have seen 2007 increases of 13.3-percent in wireless revenues, but the network is still carrying $31.2bn in debt.  Now the difference is that they're paying some of it off - $5bn in Q4 2007 - but it underscores the fact that shelling out huge, scary quantities of money is par for the course if you want to run a wireless business.

The question, then, is whether Helio's owners - SK Telecom - have the stomach for more debt and the attitude to deal with a cellular market looking increasingly bullish and, at times, desperate.  The news has been full of the carrier's $99.99 deals, and Helio really could've done more to draw attention to its own plan that, before Sprint steadied its nerve and threw Simply Everything into the ring, already offered unlimited access to all features.  As we wrote about Sprint yesterday, WiMAX could be the next big draw for Helio, too, and arguably the data-heavy and high-tech functionality the smaller carrier specialise in would be an even more obvious playground for WiMAX's high-speed connectivity.  I think, personally, it would be a shame to see Helio go under - anything that drives innovation in the US market has to be a good thing - but unless they can convince users and investors that they're still a key player, they may become just another casualty.