Internet and communications provider EarthLink said Thursday it would invest up to $100 million in the wireless joint venture Helio.
Helio, which has some 100,000 customers, was launched in 2006 by EarthLink and SK Telecom, which is based in South Korea. SK Telecom also agreed to increase its investment by the same amount.
The two companies will place an initial $30 million in Helio “on or about” July 27, EarthLink said in a statement.
Losses from Helio dragged EarthLink (NASDAQ: ELNK) into the red in the second quarter. In its earnings report, Earthlink said it loss $16.3 million, or 13 cents a share on revenues of $312.2 million. Helio expenses contributed $40 million to the losses, EarthLink said.
Rolla Huff, the new chief executive officer at EarthLink, said he was reviewing EarthLink’s business units, including Helio. That review could lead to changes at the company.
"These initial reviews are confirming that we have a number of opportunities that are largely within our control to create meaningful shareholder value in the near term,” Huff said. “These opportunities are centered around implementing a more focused business strategy and sizing our cost structure to fit our current business. I look forward to sharing our initial decisions and their impact on cash flow, no later than the end of the third quarter."
EarthLink shares traded at $7.21 Thursday, down 16 cents.
Overall revenues decreased 6 percent in the quarter. It lost a net 177,000 subscribers in the quarter. Another 753,000 subscribers were lost when EarthLink’s contract with Embarq ended.
