Virgin Mobile USA Inc and Helio LLC, companies that resell wireless services from SprintNextel Corp, are in advanced merger talks, people familiar with the situation told the Wall Street Journal.

The firms could announce a deal in the coming weeks, the report stated.

So called MVNOs, or mobile virtual network operators, do not have their own airwave licenses or the entire physical infrastructure to run a network. The MVNOs purchase bulk quantities of airtime and sell it to retail customers.

Both virtual networks have been struggling in recent months.

Virgin's profit in the latest quarter was down to $4.7 million, or 7 cents per diluted share, from $19.2 million or 38 cents per share a year ago. It also predicted that it would lose as many as 160,000 customers in its second quarter. It added just under 18,000 customers, within its forecast.

Shares of Virgin Mobile were down 10 cents, or 3.07 percent to $3.16 on Friday.

Helio has had troubles of its own. It started in 2005 as a 50-50 joint venture between Internet service provider Earthlink Inc and South Korean Telecom giant SK Telecom. However within the past year, Earthlink has agreed to let SK Telecom increase its investment in the firm, losing some of its management clout. Helio expects a $340 million to $360 million full-year net loss.

In its latest quarterly report Earthlink indicated that risks to its quarterly results include that the company may not gain the expected benefits it sought from the joint venture.

Mobile content news site first reported the merger discussions earlier this week.