NTL's Virgin Mobile offer too low

By Alun Williams

Posted on 8 Dec 2005 at 14:06

Virgin Mobile has rejected the advances of NTL. The mobile branch of Richard Branson's commercial empire deems the proposed £817m bid too low, believing it undervalues the worth of the company.

Earlier this week, we reported that cable company NTL was taking an interest in the UK mobile operator, seeking the 'quadruple' play of telephone, broadband, TV and mobile. The idea was that the group would 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.

Virgin Mobile's board, however, has rejected the NTL bid after days considering the valuation. This is despite Richard Branson, whose Virgin Group controls 72 per cent of the operator, giving his verbal backing for the deal.

The Financial Times reports that the decision is a signal to the City that the board will protect the interests of minority shareholders - the fund managers Fidelitry and Morley are the biggest, with around six per cent holdings each.

According to the paper, the rejection is likely to be discussed at an NTL board meeting in New York tomorrow, which is when the story may take another turn, if a revised bid is proposed.

It goes on to quote analysts that the company was valued fairly, given that it is a 'virtual' operator, working off T-Mobile's UK network.

In October, Spain's Telefonica paid up for another UK mobile operator - Telefónica stumps up £18bn in 02 takeover bid - but the FT points out that under Spanish law, goodwill on foreign acquisitions is tax-deductible.