It’s official: Virgin Mobile USA is indeed in talks with SK Telecom (News - Alert) to explore “strategic opportunities.” Rumors about a possible deal between the two companies surfaced earlier this week and were confirmed by Virgin Mobile (News - Alert) in a Wednesday statement.

 

Virgin Mobile USA, a North American wireless service provider headquartered in Warren, New Jersey, sells prepaid and “pay as you go” mobile services geared toward the youth market. These services, according to a Yahoo! Finance profile about the company, are used by about 5.1 million customers (year-end 2007 figures) and are delivered using the Sprint PCS network.

 

Korean wireless telecom company SK Telecom Co. (News - Alert) Ltd. is headquartered in Seoul, South Korea. Its primary investments and partnerships abroad are in the U.S. (Helio joint venture with Earthlink), China (UNISK venture with China Unicom (News - Alert)), Vietnam (SLD Telecom, marketing using the S-Fone brand), and Mongolia (investment in SkyTel). Year-end 2006 figures (cited in Yahoo! Finance’s profile of the company) indicate that the company serves more than 20 million subscribers.

 

In its statement Wednesday, Virgin Mobil said nothing aside from confirming that it is discussing partnership possibilities with SK Telecom.

 

“These discussions are in early stages, and there are no assurances that any transaction will result,” the company said in its statement. “Virgin Mobile USA will have no further comment unless a definitive agreement is reached.”

 

Both companies are sitting pretty financially despite economic uncertainty in the U.S. and a competitive market, so it makes sense they might be looking for partnerships to build on current success. Last month, SK Telecom announced first quarter 2008 results, with net income of South Korea Won (KRW) 382.9 billion (about $365.3 million), an increase of 4.6 percent year-on-year.

 

Earlier this month, Virgin Mobile also reported good news for first         quarter 2008: net income of $4.7 million. The company out-performed its own expectations, and is actively investing in its marketing efforts to support the launch of new voice and data plans.

 

Confirmation of a possible deal between the companies had a positive effect Wednesday on Virgin Mobile USA stocks (VM on the New York Stock Exchange) and a very small negative effect on SK Telecom stocks (SKM on the New York Stock Exchange). At just before 2:00 p.m. ET Wednesday, VM stocks were trading for about $3.70, up $0.66 or 21.71 percent over previous close of $3.04.

 

SKM stocks, meanwhile, were down slightly at about $23.20, down $0.06 or roughly 26 percent from previous close of $23.27.