US float to follow £1bn listing of Virgin Mobile

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The Independent Online

Sir Richard Branson is to follow the £1bn UK float of Virgin Mobile, formally announced yesterday, with an initial public offering for his American mobile phone business.

Sir Richard Branson is to follow the £1bn UK float of Virgin Mobile, formally announced yesterday, with an initial public offering for his American mobile phone business.

Sir Richard is examining floating Virgin Mobile USA, a joint venture with Sprint, in the early part of next year with an expected value of $2.5bn-$3bn. The American operation, started in the summer of 2002, is expected to break into profit in the final quarter of this year.

A spokesman for Sir Richard confirmed that the US mobile operation was the next likely float from the Virgin Group.

Another likely sale from the Virgin empire is Trainline.com, the ticket booking and information service in which Virgin owns an 84 per cent stake. That is expected to be sold next year.

Sir Richard's spokesman said the expected £400m proceeds from the Virgin Mobile UK IPO would be used to reinvest in various projects as well as bolster the group's cash reserves, kept at about £200m-£300m. New investments will include Virgin America, described as a "high quality, low cost" airline in the US, and an expansion of Virgin Group's mobile phone interests in Canada, Africa and China.

"We are also husbanding a lot of resources for an African low cost airline while maintaining our war chest of resources," said the Virgin spokesman.

The sale of a stake in Virgin Mobile is the latest in a long line of realisations that Sir Richard has made in recent years. The table shows his main disposals that have raised £1.9bn.

However, Sir Richard has also been busy forming new companies and expanding existing ones. His venture capital empire, which uses the Virgin brand to promote a range of products and services, now includes mobile phone operations in Canada, the US, and Australia where it owns 75 per cent of its telecoms operations with Singapore Telecom. As well as airlines, the group includes Virgin Money, the savings and credit card business, Virgin Rail, a joint venture with Stagecoach and V2, a record company.

It owns the Virgin Megastore retail chain and controls Victory Corporation, the cosmetics and clothing company. Other investments include Virgin Pulse, a US consumer electronics group, and Virgin Active health clubs. It still has Virgin Radio in Thailand and China.

Yesterday's announcement fleshed out some of the detail for the Virgin Mobile float, which is expected to value the company at £1bn and which also carries £300m of debt. Another beneficiary of the float will be Deutsche Telekom, which owns Virgin's network partner in the UK, T-Mobile. The German company is in line to receive 25 per cent of any valuation of Virgin Mobile over £550m. At a value of £1bn that would imply a windfall of £112.5m for T-Mobile. Sir Richard wrested 100 per cent control of Virgin Mobile from T-Mobile after an out of court settlement in January following a long running dispute between the two. The settlement involved Virgin buying T-Mobile's 50 per cent stake in the joint venture for a "minimal cost" but in return agreeing to pay T-Mobile a sum related to the company's future value on sale or flotation.

Virgin Mobile said yesterday that a global offering of its shares should be complete by the end of July.

Launched in 1999, Virgin Mobile is now the country's fifth largest mobile operator with about 4.1m customers. It piggy backs on T-Mobile's network and pays the German-owned business for carrying its calls. The chairman of Virgin Mobile will be Charles Gurassa with Sir Richard becoming honorary president. Mr Gurassa spent 10 years at British Airways, one of Virgin's most bitter rivals.

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