Virgin muscles into mobile market for small businesses

(AFP/Getty)

Sir Richard Branson will today announce plans to expand his Virgin Mobile telecoms empire into the already crowded small business market.

Coming two days after Virgin admitted that it was in talks with US telecoms company Sprint about forming a joint venture, Sir Richard will pit Virgin against Vodafone, BT Cellnet, Orange, Energis and NTL.

Sir Richard said: "Small businesses are the engine of our economy. Entrepreneurs often need a break or two to help them succeed, which is why we've designed our small business service to be the most appealing in the country."

Virgin will offer its mobile service on a contract-free basis. Call charges will range from 5p a minute to 15p. Virgin's Mobile is a 50/50 joint venture between Virgin Group and One2One, the mobile phone operator owned by Deutsche Telekom.

Virgin Mobile has a 5 per cent share of the UK market but it is banking on international expansion for further growth.

The company has a presence in Australia in partnership with Optus and it is setting up a similar partnership with Singapore Telecom, with a launch due later this year.

A spokesman for Virgin said that the company would consider launching the service for small businesses internationally next year.

However, Sir Richard is understood to see the American market as the most desirable because mobile coverage is very fragmented.

Last week it emerged that Sir Richard had mortgaged his stake in Virgin Atlantic to finance Virgin Mobile's expansion plans. It is understood that he has now set aside £50m to expand the Virgin Mobile in the US alone.

However, a deal with Sprint is far from certain. While the US telecoms company admitted for the first time last week that it was in talks with Virgin, it insisted that so far only "certain preliminary matters" had been agreed.

Later this year Virgin will face fresh competition in the small business market from NTL.

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