Virgin Mobile chief set for £20m windfall from flotation
Virgin Mobile's chief executive, Tom Alexander, is set to make a £20m windfall from the forthcoming flotation of the group.
Virgin Mobile's chief executive, Tom Alexander, is set to make a £20m windfall from the forthcoming flotation of the group.
Mr Alexander will receive a package comprising £6m in cash as a bonus for past performance, £6.5m worth of shares from the flotation and £1m in options. In addition to these payments Mr Alexander will sell back to Virgin his original holding in the company that he received at its inception in 1999.
Details of Mr Alexander's package emerged yesterday as Virgin Mobile announced that its shares will be issued at a price range between £2.35 and £2.85 a share, giving it a wide degree of flexibility before conditional trading begins on 21 July. This will raise up to £280m, the vast majority of which will go back to the Virgin group.
Virgin Mobile operates as a "virtual network", leasing airtime on T-mobile's network.
Alan Gow, the finance chief, said this business plan was in Virgin Mobile's favour and he countered claims that the company was overvalued in relation to its competitors. He said: "We are a unique business. It is difficult to find a comparable competitor, because we are between a network provider and a high street brand."
Mr Gow promised "a share plan for every employee", announcing that 6.5 per cent of the flotation would be reserved for Virgin Mobile workers.
Mr Alexander conceded that the majority of these shares would be reserved for senior figures within the company - most staff would receive a £750 windfall with flotation.
This latest move by Virgin Mobile represents the first public listing of a Richard Branson-owned company since 1986. Mr Alexander insisted: "It [the flotation] was always part of the blueprint ... we wanted to build a business that could float and start the next chapter." Even though Virgin Mobile claims to have strong brand loyalty, it is only issuing shares to corporate institutions and not private investors.
Virgin Mobile has about 4 million customers. It was launched in 1999 and has proved itself a success, especially among younger users, whose use of text and picture-messaging has given Virgin industry-leading figures for non-voice revenue.
When the flotation has been successfully completed Virgin plans to expand into the contract phone market.
Virgin Mobile's average revenue per unit - or Arpu - figure of £147 makes it an industry leader in the pay-as-you-go sector. However, the overall performance of the group lags behind other phone companies as a result of its absence from the contract phone market.
Subscribe to Independent Premium to bookmark this article
Want to bookmark your favourite articles and stories to read or reference later? Start your Independent Premium subscription today.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies