By Sinead Carew and Ritsuko Ando
NEW YORK (Reuters) - Virgin Mobile USA Inc (VM.N: Quote, Profile, Research, Stock Buzz) does not expect any improvement in U.S. economic conditions for lower and middle-income consumers through the first half of 2009, Chief Executive Dan Schulman said on Tuesday.
While the lack of improvement this year has been factored into Virgin Mobile USA's 2008 forecast, the CEO said high oil prices and home foreclosure rates will continue to hurt consumers going into next year.
"I don't see an improvement in the first half of next year either," Schulman told the Reuters Global Technology, Media and Telecoms Summit, referring to economic conditions for the low and middle-income customers who make up its customer base.
Virgin Mobile USA, which targets cost-conscious customers who pay for calls in advance, has seen a sharp slowdown in usage of its service among customers, and an increase in customers giving up their mobile phones in recent quarters.
The company, which is partly owned by Richard Branson's Virgin Group VA.UL and Sprint Nextel Corp (S.N: Quote, Profile, Research, Stock Buzz), rents space on Sprint's network to help keep capital spending low.
As a result, Schulman said Virgin's current cost structure could have some flexibility to allow it to reduce call prices further if the economy became much worse.
The company, which serves more than 5 million customers, has seen growth slow after new competition emerged in 2006. After a $15 stock market debut in October, its shares have fallen sharply to less than $4 amid investor skepticism of its prospects.
Virgin's big rivals are America Movil's (AMXL.MX: Quote, Profile, Research, Stock Buzz) Tracfone and network operators AT&T Inc (T.N: Quote, Profile, Research, Stock Buzz) and Verizon Wireless, owned by Verizon Communications (VZ.N: Quote, Profile, Research, Stock Buzz) and Vodafone Group (VOD.L: Quote, Profile, Research, Stock Buzz). Continued...
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