Virgin Mobile purchased Helio today for $39 million in equity. Helio is a small MVNO that made its name by selling powerful and high-end telephones aimed at technophiles and, thanks to an investment by South Korea’s SK Telecom, Korean-Americans. As part of the deal, Virgin Mobile is also receiving $50 million to pay down Helio’s debt (half from SK Telecom, and half from its parent company Virgin Group), as well as an additional revolving credit facility of $60 million. Just last September, SK Telecom tried to save Helio by pouring an extra $270 million into it, to no avail.

The Helio brand will be subsumed by Virgin Mobile. All of the Helio stores will close except, it’s reported, the flagship store in New York, and there is a full restructuring of the company going on right now. Thus, after much struggling, Helio enters the deadpool.

Helio had 170,000 subscribers while Virgin Mobile currently has about 5 million. The deal will also give Virgin access to a number of technologies owned by Helio including customer management and cellphone deck applications.

Helio also has received investments from Earthlink, but when Earthlink pulled out last year and charismatic CEO Sky Dayton stepped down it was clear something was afoot.

Peter Ha at CrunchGear wrote a full analysis of the merger:

So what exactly does the merger mean for customers of Helio who have grown to love the hardware and features that Helio is best known for? Well, Virgin Mobile will be keeping all of those goodies in place. If you’ve seen any VM devices, you know they stink. VM is relatively boring and absorbing the technology Helio is best known for will certainly boost the MVNO’s status and appeal to a broader audience. That means future VM devices will include apps such as Google Maps with GPS, YouTube and MySpace… all of which Helio brought to the table before other carriers.

What about the Ocean 2? If you haven’t already figured it out by now, the Ocean 2 has been delayed over the last few months because of merger talks. It’s unclear when the device will actually launch, but it hasn’t been scrapped.

While I hate to see Helio dissolve, this is great for both brands. VM knows how to make money while Helio knows how to create technology that works and is appealing.

With Helio gone Boost Mobile in the only targeted MVNO running in the US right now.

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