Virgin Mobile has announced that it intends to seek a listing on the London Stock Exchange.
Many analysts have been expecting Virgin Mobile to come to the market since it gained full control from former partner T-Mobile in January. T-Mobile sold its 50% stake in the firm to the Virgin Group to end a long-running legal battle between the two sides.
Sir Richard Branson, the British entrepreneur, has built a business empire spanning airlines to music shops. Sir Richard is the UK’s sixth wealthiest individual, with a personal fortune of GBP2.6 billion pounds, according to the Sunday Times Rich List.
The flotation of Virgin Mobile will the first time that Sir Richard has listed one of his companies in London for almost 18 years. He is expected to become the Honorary President of Virgin Mobile upon listing, while travel industry expert Charles Gurassa has joined the board as chairman. Reports suggest that the operator hopes to raise at least GBP250 million, with roughly 40% of the group coming to market, depending on investor demand.
Launched in November 1999, Virgin Mobile is a mobile virtual network operator that uses the network of Deutsche Telekom’s T- Mobile unit, and resells minutes under the Virgin brand. Its main business comes from branded pay-as-you-go mobile phones, which are targeted mainly at the youth market. This has netted the operator approximately 4.1 million customers.
There are concerns over how the market will react to the IPO. Some predict a negative reaction to the listing because it is being viewed simply as a means for Sir Richard to generate cash ahead of the launch of a domestic airline in the US next year.
In Europe, fund managers are becoming increasingly selective, and therefore may decide to play hardball with the operator. When the official share price range is announced sometime around July 20, they could reasonably expect a discount off the offer price, as only a minority stake is up for grabs and Virgin Mobile is facing rising competition in the UK.
