Virgin stock falls on news of unlimited calling plan

While Virgin Mobile’s announcement of an unlimited calling plan might have sounded good to prepaid aficionados, it didn’t resonate well with the folks on Wall St. The company’s stock took a 15 percent hit, partly because of Pali Research downgraded it to “sell.” The reason given by analyst Walter Piecyk: “We do not believe its new rate plans will help ARPU because we do not believe they are relevant to its addressable market.”

Maybe Virgin’s unlimited plan won’t appeal to its current demographic, but this could be opening up a new target audience. If you’re looking for unlimited voice and text, why not go with the company that doesn’t require to you sign a two-year contract? Plus, with the rumored Helio acquisition, Virgin might find 200,000 new, higher-end customers.

It might take a while for Virgin to realize the potential of this group. Some are already under contract, and have to wait it out in order to avoid paying an early termination fee. Eventually, though, I can see them capturing a decent portion of the unlimited calling market.

With add-ons of $10 per month for unlimited text messaging and another $10 for taxes and fees, you’re looking at a flat $100 per month for unlimited calling and texting. Throw another $5 on that and you can get 5 MB of mobile Web. It might not exactly be Sprint’s Simply Everything plan, but it’s definitely one of the better deal out there.

Don’t worry, Virgin. I got faith in ya.

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One Response

1. PrepaidWirelessGuy Says
   

   Definitely an interesting play. It could be a competitive alternative to the recent unlimited postpaid plans; however, it’s kind of an odd approach for competing with plans targeted to the prepaid demographic like Metro and Cricket. It’ll be very interesting to see what kind of penetration this plan yields.

   
   Posted on June 25th, 2008 at 9:33 pm

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