NTL bids for Virgin Mobile

By Steve Malone

Posted on 5 Dec 2005 at 11:37

The cable television company NTL is bidding to take over Richard Branson's Virgin Mobile business in a deal thought to be worth over £800 million. Under the terms of the deal Branson would swap his 72 per cent holding in Virgin Mobile for a 14 per cent stake in the new business.

The assets of the new group would offer the trendy 'quadruple' play of telephone, broadband, TV and mobile, which is being sought by media groups across the world. The group will combine the five million customers of Virgin Mobile and the four million of NTL to offer bundled deals and the advantage of a single bill for all services at the end of the month.

NTL has had a troubled financial past. Several years ago, for example, it sought Chapter 11 bankruptcy protection in the US. The financial problems followed the massive investment in the infrastructure required to roll out cable across the UK and the intense competition from BSkyB bankrolled by Rupert Murdoch's News Corp.

In October of this year, NTL and Telewest finally announced the long awaited plans for a merger, worth £6.5 billion, to form a single national cable operator able to take on BSkyB and Freeview in the battle for the fast-growing digital television market. In fact, it is rumoured that the new combined group may bid for the rights to show Premier League football following the recent decision by the EU that the current deal with BSkyB is uncompetitive. Potentially, this would open the prospect of Premier League football being shown on Virgin Mobile phones.

However, BSkyB is also expanding into the market. In October, the company bought EasyNet for £211 million in a bid to enter the expanding broadband market and take a share in the future TV-over-IP market.