SOURCE: IBM

July 03, 2008 09:10 ET

Virgin Mobile USA and IBM Sign IT Services Agreement

Deal to Accelerate Delivery of New Products, Services and Capabilities to Virgin Mobile USA Customers

WARREN, NJ--(Marketwire - July 3, 2008) - Virgin Mobile USA, Inc. (NYSE: VM), a leading national provider of prepaid and hybrid wireless plans, today signed a services agreement for Information Technology (IT) operations and new applications development with IBM (NYSE: IBM). The agreement will allow Virgin Mobile USA to enhance its technology capabilities and improve its product portfolio for new and existing customers by affording the Company access to IBM's significant telecommunications industry experience and state-of-the-art IT resources.

Under the terms of the new services agreement, IBM will begin transitioning Virgin Mobile USA's existing IT infrastructure and application suite into its own environment. Simultaneously and continuing over the course of the next five years, IBM will work with Virgin Mobile USA to develop new and differentiated wireless applications and service offerings. Specifically, IBM will provide Virgin Mobile USA with data center outsourcing and application management services including maintenance and development.

The agreement provides Virgin Mobile USA with yet another strategic milestone contributing to its growth profile.

The Company recently announced its plans to acquire the postpaid carrier Helio. This additional step, separate from the Helio acquisition, will serve to enhance Virgin Mobile USA's technology capabilities and improve its product portfolio by affording the Company access to IBM's significant telecommunications industry experience and state-of-the-art IT resources.

Virgin Mobile USA expects that, as a result of its new relationship with IBM, the Company will realize IT-related operational cost savings over the next five years, while amplifying the Company's competitive advantage in new product and service delivery. The expected benefits of the Company's new relationship with IBM are key components of Virgin Mobile USA's focused expansion and value creation strategy.

The Company expects the transition of its existing IT infrastructure and application suite to IBM to be completed by December 31, 2008.

"We have built our success as a customer-centric innovator, and always seek to enhance our product and service offerings," said Jonathan Marchbank, Chief Operations Officer, Virgin Mobile USA. "These steps will continue to raise the standards in the prepaid market overall and allow us to stay current with, and ahead of, trends and evolutions in the overall wireless industry. With over 5 million customers, the scale we've achieved now puts us in a position to take advantage of IBM's proven best practices, scope and unparalleled experience in running and building IT infrastructure."

Marchbank emphasized that the agreement will allow Virgin Mobile USA to:

--  leverage IBM's investments in mobile technology to deliver better
    applications to customers, bring new services to market more quickly, and
    dynamically respond to market trends;
--  fund strategic initiatives to broaden the Company's offerings and
    accelerate its growth;
--  help support the integration of the assets of its new acquisition; and
--  reduce operational and R&D costs.
    

"The telecommunications industry must stay current with innovative packages and solutions that promote anywhere and anytime communication services such as instant messaging, photo sharing and GPS capabilities," said Don Lopes, IBM vice president, Telecommunications Industry. "IBM is excited to apply its telecommunications industry insight, business transformation expertise, and IT outsourcing best practices to enable Virgin Mobile USA to deliver next-generation mobile solutions and service to its customers."

As outlined in the agreement, more than 40 Virgin Mobile USA IT employees will transfer to IBM. In addition, select employees from the Company's Walnut Creek, California facility will be offered the opportunity to relocate to the Warren, New Jersey headquarters; others will be focused on the Helio integration plan.

About Virgin Mobile USA

Virgin Mobile USA (NYSE: VM), through its operating company, Virgin Mobile USA, L.P., offers more than five million customers control, flexibility and choice in wireless service, rich data content and innovative products without annual contracts. Voice pricing plans range from monthly options with unlimited nights and weekends to by-the-minute offers, allowing consumers to adjust how and what they pay according to their needs. Virgin Mobile USA's smart, stylish and affordable handsets, including the Wild Card, Slash and Flare, are available at top retailers in more than 40,000 locations nationwide and online at http://www.virginmobileusa.com with Top-Up cards available at more than 140,000 locations.

J.D. Power and Associates ranked Virgin Mobile USA highest in customer satisfaction among wireless prepaid services in both 2006 and 2007, and its customers report a 90% satisfaction rate. Virgin Mobile USA allows customers to add free minutes by engaging with like-minded brands on their website through Sugar Mama; and provides postage-paid return envelopes in every new phone package for customers to recycle old phones. Virgin Mobile USA's national coverage is powered by the nationwide Sprint PCS network.

About IBM

For more information, visit www.ibm.com/services.

This press release contains certain forward-looking statements and information relating to us that are based on the beliefs of our management as well as assumptions made by, and information currently available to, us. These statements include, but are not limited to, statements about our strategies, plans, objectives, expectations, intentions, expenditures, and assumptions and other statements contained in this document that are not historical facts. When used in this press release, words such as "anticipate," "believe," "estimate," "expect," "intend," "plan" and "project" and similar expressions, as they relate to us are intended to identify forward-looking statements. These statements reflect our current views with respect to future events, are not guarantees of future performance, and involve risks and uncertainties that are difficult to predict. Further, certain forward-looking statements are based upon assumptions as to future events that may not prove to be accurate.

Many factors could cause our actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those risks and uncertainties discussed in our filings with the Securities and Exchange Commission, copies of which are available on our investor relations website at http://investorrelations.virginmobileusa.com and on the SEC website at http://www.sec.gov. In addition, factors that could cause actual results to differ from those projected include, but are not limited to, the following: (1) the occurrence of any event, change or other circumstances that could give rise to the termination of our agreement to acquire Helio, (2) the inability to complete the Helio acquisition due to the failure to satisfy conditions to the completion of the transactions, including the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, if applicable, and the failure to receive other required regulatory approvals, including approvals from the Federal Communications Commission, (3) risks that the acquisition and related transactions would disrupt current plans and operations and the potential difficulties in employee retention as a result of the transactions, (4) the ability to recognize the results of the acquisition and related transactions, (5) the amount of the costs, fees, expenses and charges related to the acquisition and related transactions, and (6) risks that Helio or any other companies we may acquire could have undiscovered liabilities, may strain our management capabilities or may be difficult to integrate.

We neither intend nor assume any obligation to update these forward-looking statements, which speak only as of their dates.

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