The latest scuttlebutt has Virgin Mobile and Helio discussing a merger deal. The world is a dangerous place for MNVOs considering the rash of bankruptcies and closures in the last two years. Apparently the remaining ones are considering forming packs in order to survive.

Of course, none of this is confirmed. MocoNews.net first reported the possible deal last week, and the Wall Street Journal backed it up with its own unnamed sources. But Helio owner SK Telekom denied any such discussion with Virgin Mobile, though it acknowledged it was still actively seeking expansion opportunities in the U.S. Regardless of how any such deal would take shape—whether SK bought Virgin Mobile USA or Virgin bought Helio—the question is, what benefit would either company gain from such a tie-up?

Both Virgin and Helio are mobile virtual network operators on the Sprint network to be sure, but that’s where the similarities end. Virgin is a prepaid operator that focuses on the broad demographic of youth. Helio is a high-end service for the tech-savvy. You could say that both focus on the young and hip, but Virgin’s average customer scales younger than Verizon’s. Helio would only start taking interest in Virgin’s customers after they received their credit cards. The biggest difference, though, is that Virgin has gobs and gobs of customers (more than 5 million). Helio does not (less than 200,000).

So what’s the interest? Perhaps it’s aspirational: Maybe Virgin wants to expand beyond the low-dollar prepaid market into a higher-revenue set. Perhaps Virgin wants to take advantage of Helio’s fancy handset agreements to offer a better class of device to its customers as well as tap into the growing data market beyond text messaging. The problem is, I don’t see any of that technology or those services transferring. The high-end feature phones that Helio sells are beyond the price range of the typical prepaid customer, and the data subscription models don't transfer easily.

I’m not the only one that’s a bit puzzled by the idea. Says NERA Economic Consulting analyst Christian Dippon: “The synergies are pretty straight-forward: Virgin's strong brand name and excellent distribution channels will provide Helio with the much needed market boost. What Virgin gets from the deal is somewhat less clear. Naturally, it allows Virgin to expand its target market from discount subscribers to include teenage, gadget-savvy kids, yet it is unclear whether this will help Virgin Mobile to sufficiently boost its net adds, particularly in the discount segment.”

Dippon’s conclusion is that maybe Helio is selling itself for cheap, and Virgin can’t possible pass up such a deal. That would be somewhat surprising, though, considering SK just made another $270 million investment in Helio to keep it solvent. Virgin has projected slow growth for the year, so maybe it’s looking for another outlet besides prepaid to apply its brand and savvy marketing skills to. But there may be better acquisition targets for such a strategy. Besen Group founder and managing consultant Alex Besen pegs Kajeet as a much more synergistic buy.

“Kajeet targets the tween segment between the ages of 12 to 14 years old,” Besen said. “Virgin targets the youth segment from the ages of 14 to 34 years old.”

How’s that for acquisition with no overlap? Of course, maybe renaming Kajeet as Virgin Kids or Virgin Youth wouldn’t play too well, but that’s a discussion for the marketing folks.

Contact me at kfitchard@telephonyonline.com.