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The takeover will see a combined group - offering cable TV, Internet access and fixed line telecoms, as well as a mobile phone offering - that will retain the Virgin brand. The deal thus gives NTL 'quadruple play', enabling it to offer customers the full range of digital services.

'It is truly a step-change transaction not only for NTL but for the media sector as a whole in the UK,' the BBC quotes James Mooney, executive chairman of NTL.

It was the second approach from NTL, after

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Virgin Mobile rejected a £817m offer in December 2005. This was despite Richard Branson, whose Virgin Group controls 72 per cent of the operator, giving his verbal backing for the deal.

At the time, the rebuff was interpreted as a signal to the City that the Virgin board would protect the interests of minority shareholders and not be overridden by the interest of Richard Branson and the Virgin Group. But it seems agreement has now been reached.

'After careful consideration, the independent directors of Virgin Mobile intend to recommend NTL's offer to shareholders,' the BBC quotes Charles Gurassa, chairman of Virgin Mobile.

The latest offer from NTL will see owners of Virgin Mobile shares offered a choice of 372p cash per share or NTL shares.

A familiar competitor for NTL will be Sky, which has already added DSL services to its offerings and bought the broadband networks company Easynet in October 2005, but it currently doesn't have a mobile element to offer consumers.