Sprint PCS Tries Prepaid Again

Drumming up business in a down market is always challenging, so Sprint PCS (PCS Quote) is hooking up on a joint venture with British tycoon Richard Branson's Virgin Group.

The nation's No. 4 wireless carrier and Branson's Virgin Mobile USA will launch a new prepaid wireless service around midyear, targeting the credit-strapped under-30 set. Sprint PCS has agreed to pony up to $150 million, mostly in services but with some cash thrown in; Virgin plans to contribute up to $150 million in cash.

The deal looks appealing for Sprint PCS because it allows the company to fish for a much-needed new revenue source while sharing the risk with a partner. But some observers would note that the big wireless carriers have scorned the prepaid market for a reason, namely its poor economics. Sprint PCS shares lost 32 cents, or 3.1%, to $10.01. ...