Virgin plugs its mobiles into supermarkets

(AFP/Getty)

Sir Richard Branson's hopes of dominating the UK cell phone market will take a step forward this week when his Virgin Mobile offshoot starts selling its handsets in supermarkets.

Sir Richard Branson's hopes of dominating the UK cell phone market will take a step forward this week when his Virgin Mobile offshoot starts selling its handsets in supermarkets.

Until now, the virtual network operator's sales have been made in Virgin's Our Price record stores or over the telephone and internet. However, Sainsbury's will this week become the first independent chain to stock Virgin's products. The victory is all the sweeter for having come at the expense of rival Orange, whose products will now be replaced by Virgin Mobile's on the supermarket chain's shelves.

Other retailers, including WH Smith, Iceland and the Co-op, are poised to follow Sainsbury's example. Virgin Mobile is aiming eventually for them to be stocked in more than 2,000 stores. They can currently be found in about 320 Our Price stores, the chain that Virgin has begun to redesign and rebrand. Virgin Mobile's products are conspicuous by their absence from the shelves of Carphone Warehouse, Britain's largest independent cell phone retailer that last year had a high-profile row with Sir Richard over commissions.

In fact, the cheap deals offered by supermarkets have begun to have an impact on the shopping habits of Britain's mobile phone users. In the run-up to last Christmas, more than 40 per cent of handset sales took place in supermarkets.

Virgin Mobile, that is a joint venture with One2One, one of Britain's four network operators, last week revealed plans for its first injection of external funds. The company intends to raise £115m through a syndicated loan arranged by JP Morgan, the investment bank. The money is meant in part to fund this new wave of independent distribution deals.

Virgin Mobile was set up last year when Virgin and One2One - owned by Deutsche Telekom - each invested £50m in a venture that one analyst has since valued at £1.36bn. Ultimately, the company is expected to seek a stock market listing.

To sustain its momentum, Virgin Mobile has begun to look abroad with partnerships announced in Europe and Asia. It is also in talks with three US networks - AT&T, Sprint and Voicestream - aimed at recreating the success of its British joint venture across the Atlantic. In the UK, Virgin Mobile claims to have already secured 400,000 subscribers, who will also swell the latest subscriber figures of One2One due this week.

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