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NTL may license Virgin brand - report

Wed, 01/11/2006 - 5:48am

Copyright 2006 Total Telecom
All Rights Reserved
Total Telecom
January 10, 2006 Tuesday
Anne Morris, Total Telecom
From LexisNexis

NTL is planning to strike a full brand-licensing deal with the Virgin Group as attempts by the cable operator to buy Virgin Mobile U.K. have so far been thwarted by the board of the mobile virtual network operator, Reuters reported.

Reuters said sources close to the matter believe a takeover of the MVNO is now unlikely due to disagreements over price, even though a merger of NTL/Telewest with Virgin Mobile to create a "quadruple player" under the Virgin brand name had the full support of Sir Richard Branson, the owner of the Virgin Group.

NTL originally offered to buy Virgin Mobile U.K. for 323 pence per share in early December last year, giving the company a total value of £817 million.

The offer was rejected by the MVNO's board just days later. The board said the offer "materially undervalues" the mobile company.

Recent reports say institutional shareholders in Virgin Mobile U.K. have now told the company's board it should reject any takeover bid from NTL worth less than 400p a share.

It therefore seems that NTL, which is still embroiled in the merger process with former rival Telewest, is now reverting to an original plan to form a licensing deal with Virgin rather than buy the MVNO, sources say, according to Reuters.

NTL already markets and sells Virgin.net Internet services through a licensing agreement with Branson.

NTL's original idea was to extend that agreement to all its services, but as the talks progressed they began to focus on an acquisition of Virgin Mobile instead, one person close to the matter told Reuters.

A full branding deal with the Virgin Group would mean that all telephony, cable TV and broadband services offered by the combined NTL/Telewest group could be sold under the Virgin brand, although NTL would not achieve its goal of adding wireless to the mix.

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