Virgin Mobile USA, whose shares rose as much as 46 percent after the news, also confirmed the talks the day after SK had downplayed speculation about a possible deal with the U.S. operator, saying no specific negotiations were underway.
SEOUL (Reuters) - SK Telecom Co <017670.KS>, South Korea's top mobile operator, confirmed on Wednesday that it was in preliminary talks with Virgin Mobile USA <VM.N> about strategic opportunities for its Helio U.S. arm.
Virgin Mobile USA, whose shares rose as much as 46 percent after the news, also confirmed the talks the day after SK had downplayed speculation about a possible deal with the U.S. operator, saying no specific negotiations were underway.
"(SK Telecom) is currently exploring strategic opportunities for Helio and has engaged in preliminary discussions with Virgin Mobile USA with respect to such an opportunity," SK said in a clarification statement.
The company said discussions were at an early stage and would not necessarily lead to a deal.
!ADVERTISEMENT!SK Telecom declined to comment on whether it aims to buy Virgin Mobile's business or is thinking of selling its stake in Helio.
Helio, which has been losing money, is 69 percent owned by SK, with EarthLink Inc <ELNK.O> holding 28 percent.
Virgin Mobile USA said in a statement on Wednesday morning that it was in early talks with SK to explore strategic opportunities, but would not comment further unless it reaches a definitive agreement.
Virgin Mobile stock, which had tumbled from its October debut of $15, was up 82 cents, or 27 percent, at $3.86 in morning New York Stock Exchange trade after rising as high as $4.43 after the news. The shares had fallen as low as $2.67 on Wednesday after SK poured cold water on reports of their discussions.
Recent blog reports said talks had included scenarios such as SK buying Virgin Mobile USA and combining it with Helio.
SK is looking to overseas markets such as China and the United States as expansion becomes more difficult at home, where more than 90 percent of the population have a mobile phone.
"SK Telecom has an aggressive stance on expanding its operation in the United States," said Hyundai Securities analyst Lee Shi-hoon. "They have money to invest. It could be that SK changed its focus to Virgin Mobile after the deal with Sprint Nextel did not work out."
In November, SK Telecom said it had approached Sprint Nextel Corp <S.N> with several cooperation measures. Sources said Sprint Nextel had rejected a $5 billion investment by a group that included SK.
Virgin Mobile, which is partly owned by Richard Branson's Virgin <VA.UL> and Sprint Nextel, has been suffering from customer defections amid the U.S. economic slowdown and increased competition from rivals.
It focuses on prepaid services, while Helio targets tech-savvy consumers looking for sophisticated devices and data services such as mobile Web surfing.
Both Virgin and Helio rent space on Sprint's network.
(Reporting by Rhee So-eui and Park Ju-min in Seoul and Sinead Carew in New York; Editing by Keiron Henderson and Lisa Von Ahn)
