UK cable company NTL makes bid for Virgin Mobile
Richard Branson, the British multi-zillionaire, may soon be even more powerful, but he will have to give up a bit of his independence in the process. He currently owns 72% of Virgin Mobile. NTL, a major player in the UK cable business, is attempting to buy Virgin Mobile, making a bid of $1.4 billion. The new company would operate under the Virgin brand.
Under the terms of the deal, Branson would trade his shares in Virgin Mobile for shares in NTL, making him the largest shareholder of the combined company with a 14% stake. Minority shareholders of Virgin Mobile could choose between shares or cash.
This is another example of the move towards the “quadruple play” which combines NTL’s existing voice, internet and TV services and with Virgin’s mobile service, allowing a customer to get all of their communication needs from one company. NTL is currently the second biggest TV operator in the UK and the second biggest residential phone provider. This new move will increase their competitive advantage as their rivals strive to develop a full range of services as well.
Virgin Mobile is the fifth largest mobile provider in the UK. They do not own their own network, but rather rent capacity on T-Mobile’s UK network. The company has been viewed as a likely takeover target over the last months because of consolidation in the British market. There is still a possibility that other bidders will emerge.
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