EarthLink to Scale Back Commitment to Wireless Joint Venture

ATLANTA — EarthLink, which announced plans to cut half its workforce and also reduced its commitments to city wireless networks, is now cutting back on its support for Helio, a wireless joint venture with SK Telecom.

The South Korean phone company said Friday it would invest as much as $270 million more in Helio, which targets teens and early technology adopters. The service was launched in 2005.

Later, EarthLink (Nasdaq: ELNK ) Chief Executive Officer Rolla Huff disclosed his decision to possibly cap the communications provider’s investment in Helio.

"We are very pleased that with SK Telecom's funding, Helio will be able to move forward with its innovative business plan without the need for further investment by EarthLink, while continuing to allow our company to have a substantial ownership interest in Helio's future," Huff said.

"We believe this is good news for EarthLink shareholders and is consistent with our statements over the past two months."

However, in July, Huff said EarthLink was prepared to invest an additional $100 million in Helio. In its second quarter earnings report, EarthLink said it lost $40 million on its 50-50 share in Helio and overall lost $16 million.

On Friday, EarthLink said it and SK Telecom were “currently in discussions to amend their existing agreements to reflect the additional investment by SK Telecom and their future governance of Helio.”

Huff took over as EarthLink CEO in June and immediately moved to make major changes in the company. The executive leading municipal wireless network efforts has left the company, and EarthLink is pulling back on that possible avenue of growth. The company is also letting go 900 of its 1,800-member workforce.

Helio has 130,000 subscribers and expects to double that by year’s end, according to EarthLink.