Sprint seeks Kansas City headquarters for struggling Virgin Mobile brand

Sprint Corp., hoping to rejuvenate its struggling Virgin Mobile USA brand, plans new headquarters for Virgin in downtown Kansas City.

An announcement Friday indicates a search is underway for a location as well as for more than 50 employees, including executives. They will join newly appointed Virgin CEO Dow Draper, who until recently had been head of Sprint’s prepaid and wholesale wireless businesses.

Virgin is a prepaid wireless brand, charging customers for wireless service before they use it. It might not stay that way. Setting up a separate headquarters is one step in Draper’s larger assignment, namely remaking Virgin Mobile.

Virgin Mobile won’t limit itself to the traditional prepaid wireless service model it follows now, Draper said. He was reluctant to offer details for competitive reasons but said it could mean prepaid offers, postpaid offers or “a different spin on wireless in general.”

Those announcements will come in the months ahead.

Wireless industry analyst Bill Ho of 566 Ventures LLC said the headquarters announcement could mean Sprint plans to position Virgin as a flanker brand. The idea is that Sprint would attack its competition directly with its Sprint brand and use Virgin Mobile to attack in a different way, seeking to flank the competition.

Tim Cowden, president and chief executive of the Kansas City Area Development Council, said in an interview that Virgin considered locating its venture in areas throughout Kansas City as well as markets elsewhere, primarily on the West Coast.

Cowden added that Virgin would lease existing office space and hire 50 new people to staff the office, as opposed to moving existing employees to this headquarters downtown.

“The Virgin brand family is very powerful and has a global reach, so the fact that they are going to relaunch this brand from Kansas City is truly significant,” Cowden said. “It’s all new jobs. They’re not moving jobs around. They’re creating these 50 new jobs. They’re excellent jobs to have in this community and I know they’re planning on growing from there.”

Virgin is expected to start considering job applicants immediately.

Missouri granted up to $1.87 million in incentives to Virgin through the Missouri Works program, which allows companies to retain payroll withholding taxes for jobs it creates over a five-year period. In Virgin’s case, the incentives are contingent upon creating up to 84 jobs.

“By making smart investments in education, workforce development and entrepreneurship, we will continue to make Kansas City and the entire state the ideal location for companies to locate and grow,” Missouri Gov. Jay Nixon said in a news release.

Draper said Kansas City fit Virgin’s plans because it provides a meaningful distance from Sprint’s Overland Park campus and will help the team focus while still allowing Virgin Mobile employees to collaborate easily with their Sprint counterparts.

Draper said the economic incentives, while not massive, served as something of a “cherry on top” of the Kansas City choice.

“If Missouri hadn’t done it, we may have made a different decision,” Draper said.

Virgin expects to have the headquarters occupied by the end of the year. Sprint is based in Overland Park and occupies only a portion of the massive campus it built years ago.

Two other Sprint executives are moving with Draper to what he called a small satellite office that will be Virgin Mobile’s headquarters. They are his chief marketing officer, Angela Rittgers, and his chief operating officer, Doug Smith.

Everyone else will be new hires, not transfers from Overland Park or other locations where Virgin Mobile operates such as California and New Jersey. Draper also said Virgin Mobile employees elsewhere will keep their jobs or refocus on other parts of them, perhaps with Sprint’s other brands.

The downtown location, Draper said, will help him attract employees with different skill sets than he typically finds at Sprint. He wouldn’t elaborate.

A separate headquarters also will give the Virgin Mobile team a stronger “founder’s mentality” that Draper said will be key to its success. Compensation for the team will be tied to Virgin Mobile’s success further entrenching that mentality, he said.

Sprint has struggled in the prepaid wireless market, losing customers in the face of more intense competition from rivals Verizon, AT&T and T-Mobile. Virgin in particular has struggled more than Sprint’s Boost Mobile prepaid brand.

This story was originally published July 15, 2016 at 9:33 AM with the headline "Sprint seeks Kansas City headquarters for struggling Virgin Mobile brand."