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Virgin Mobile USA and IBM Sign IT Services Agreement


Deal to Accelerate Delivery of New Products, Services and Capabilities to Virgin Mobile USA Customers

WARREN, NJ .- Virgin Mobile USA, Inc. (NYSE: VM), a leading national provider of prepaid and hybrid wireless plans, today signed a services agreement for Information Technology (IT) operations and new applications development with IBM (NYSE: IBM). The agreement will allow Virgin Mobile USA to enhance its technology capabilities and improve its product portfolio for new and existing customers by affording the Company access to IBM’s significant telecommunications industry experience and state-of-the-art IT resources.

Under the terms of the new services agreement, IBM will begin transitioning Virgin Mobile USA’s existing IT infrastructure and application suite into its own environment. Simultaneously and continuing over the course of the next five years, IBM will work with Virgin Mobile USA to develop new and differentiated wireless applications and service offerings. Specifically, IBM will provide Virgin Mobile USA with data center outsourcing and application management services including maintenance and development.

The agreement provides Virgin Mobile USA with yet another strategic milestone contributing to its growth profile.

The Company recently announced its plans to acquire the postpaid carrier Helio. This additional step, separate from the Helio acquisition, will serve to enhance Virgin Mobile USA’s technology capabilities and improve its product portfolio by affording the Company access to IBM’s significant telecommunications industry experience and state-of-the-art IT resources.

Virgin Mobile USA expects that, as a result of its new relationship with IBM, the Company will realize IT-related operational cost savings over the next five years, while amplifying the Company’s competitive advantage in new product and service delivery. The expected benefits of the Company’s new relationship with IBM are key components of Virgin Mobile USA’s focused expansion and value creation strategy.

The Company expects the transition of its existing IT infrastructure and application suite to IBM to be completed by December 31, 2008.

“We have built our success as a customer-centric innovator, and always seek to enhance our product and service offerings,” said Jonathan Marchbank, Chief Operations Officer, Virgin Mobile USA. “These steps will continue to raise the standards in the prepaid market overall and allow us to stay current with, and ahead of, trends and evolutions in the overall wireless industry. With over 5 million customers, the scale we’ve achieved now puts us in a position to take advantage of IBM’s proven best practices, scope and unparalleled experience in running and building IT infrastructure.”

Marchbank emphasized that the agreement will allow Virgin Mobile USA to:

* leverage IBM’s investments in mobile technology to deliver better applications to customers, bring new services to market more quickly, and dynamically respond to market trends;
* fund strategic initiatives to broaden the Company’s offerings and accelerate its growth;
* help support the integration of the assets of its new acquisition; and
* reduce operational and R&D costs.

“The telecommunications industry must stay current with innovative packages and solutions that promote anywhere and anytime communication services such as instant messaging, photo sharing and GPS capabilities,” said Don Lopes, IBM vice president, Telecommunications Industry. “IBM is excited to apply its telecommunications industry insight, business transformation expertise, and IT outsourcing best practices to enable Virgin Mobile USA to deliver next-generation mobile solutions and service to its customers.”

As outlined in the agreement, more than 40 Virgin Mobile USA IT employees will transfer to IBM. In addition, select employees from the Company’s Walnut Creek, California facility will be offered the opportunity to relocate to the Warren, New Jersey headquarters; others will be focused on the Helio integration plan.


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