Virgin Mobile prices IPO at up to £713m

Trimming expectations

Virgin Mobile today announced a target range of 235p-285p per share for its stock market float. This values the mobile virtual network operator at £588m to £713m ($1.08bn - $1.32bn) net and is less than expected. Analysts had targeted up to £1bn for the float. The enterprise value of the business is set at £900m and £1.025bn, with Virgin Mobile carrying £311m in debt on its books. It makes its debut on the London Stock Exchange on 21 July.

Virgin Mobile will float 37-47 per cent of the business, depending on demand. This will give Richard Branson's Virgin Group £230m to £275m. The City expects Branson to pump the money into a new US domestic airline, which launches next year.

And let's not forget T-Mobile, which handles the technical stuff for Virgin Mobile, leaving its customer to concentrate on the billing and customer relationships. It gets 25 per cent of any equity value over £550m, capped at £100m, so it will be very disappointed if Virgin Mobile is pumped out at the lower price.

There's a lot more background in the press release. You are not supposed to read it if you live in the US, Canada, Australia or Japan. So access may be blocked if you come from these countries. ®

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