Virgin and T-Mobile to co-habit after divorce
Thrashing out terms
Virgin Mobile and T-Mobile are days away from agreement over dissolving their joint venture, The Sunday Times reports.
And it looks like T-Mobile won't get much or anything in the way of hard cash for its for its 50 per cent stake. Instead, Virgin, a MVNO or mobile virtual network operator as it is known in the trade, will continue to use T-Mobile as its insfrastructure supplier.
Only this time, it will accept worse terms from T-Mobile, The Sunday Times says.
Armed with full ownership, the way will be clear for Virgin Mobile to float. T-Mobile had wanted up to £500m for its stake in Virgin, implying an IPO valuation for the company of £1 billion. This is the high-end of analyst estimates, some of which come in as low as £500m.
Virgin and T-Mobile have been to court a few time squabbling over money. In the most recent round in November 2003, Jonathan Sumption, QC, for T-Mobile said: "Relationships between these parties have broken down - and irretrievably broken down." Now it looks like they are happy to co-habit.
The dispute between the two companies revolves around the £4.56 monthly flat fee paid by T-Mobile for each customer signed up by Virgin. However, it has had pay this sum even if the customer is inactive. Virgin Mobile has three million customers signed up, who are serviced through the T-Mobile network, so there is a hefty loss-making potential for the supplier. ®