SK Telecom props up Helio

SK Telecom will plow up to $270 million into Helio to keep the company operating, according to EarthLink, SK’s partner in the MVNO joint venture.

Helio has been operating since last year, selling its particular brand of high-end data services and fancy feature phones to a small but deep-pocketed subscriber base, but while the start-up has managed to draw in 130,000 subscribers, it has been bleeding money. In the second-quarter Helio posted a net loss of $83.8 million, and EarthLink said today it expects Helio to report a full-year loss between $340 million and $360 million.

EarthLink has been facing its own financial difficulties from its underperforming municipal wireless business unit as well as its declines in its core broadband and narrowband subscribers. Helio’s losses only added more drag to its results, making it difficult for EarthLink to supply funding to keep Helio afloat.

“We are very pleased with SK Telecom’s funding,” EarthLink CEO and president Rolla Huff said in a statement. “Helio will be able to move forward with its innovative business plan without the need for further investment by EarthLink, while continuing to allow our company to have a substantial ownership interest in Helio’s future.”

EarthLink and SK Telecom said they are currently negotiating how to restructure their 50-50 joint venture to reflect the additional investment from SK Telecom. Considering that both companies each initially invested $220 million in Helio for start-up capital, SK Telecom stands to gain a significant controlling stake with today’s $270 million infusion.

The MVNO market has soured in the last year, starting with Mobile ESPN shuttering its doors last September. Over the summer, Amp’d Mobile faced a similar funding crisis after failing to elicit more capital from its investors—some of them hedge funds facing their own financial difficulties—and was forced into bankruptcy.