NTL, Virgin Mobile in merger talks
Technix
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LONDON (Reuters) - Britain's Virgin Mobile Holdings Plc is in merger talks with UK cable operator NTL a source familiar with the matter said on Saturday.
"This is just the start of a process that could bring about a group capable of offering a wide variety of communications services," the source said, adding that the merged firm would include the Virgin name once a deal was sealed.
Virgin Mobile is majority-owned by British entrepreneur Richard Branson.
The source said that a tie-up between NTL and Virgin Mobile would see the new group provide mobile and fixed line telephony services as well as cable television and Internet access.
NTL and Virgin, which both declined to comment, have had business dealings before.
In 1996, the two launched Internet service provider Virgin Net, which in 2004 was fully taken over by NTL and still trades under the same brand name.
NTL recently agreed a long-awaited deal to buy rival Telewest for $6 billion in a move to compete more effectively with the likes of BSkyB and BT.
"This is just the start of a process that could bring about a group capable of offering a wide variety of communications services," the source said, adding that the merged firm would include the Virgin name once a deal was sealed.
Virgin Mobile is majority-owned by British entrepreneur Richard Branson.
The source said that a tie-up between NTL and Virgin Mobile would see the new group provide mobile and fixed line telephony services as well as cable television and Internet access.
NTL and Virgin, which both declined to comment, have had business dealings before.
In 1996, the two launched Internet service provider Virgin Net, which in 2004 was fully taken over by NTL and still trades under the same brand name.
NTL recently agreed a long-awaited deal to buy rival Telewest for $6 billion in a move to compete more effectively with the likes of BSkyB and BT.
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This weekend, Branson’s advisers were in advanced talks with Simon Duffy, chief executive of NTL, to merge their businesses in a deal likely to be valued at £7 billion or more.
The new company will adopt the Virgin brand, and will be the biggest business to use a name that is synonymous with Branson, the billionaire who is one of Britain’s most successful businessmen.
The intention is to create a combined media and telecoms business that could offer customers four services — television, fixed-line telephony, mobile phone and broadband internet connections.
It is hoped this “quad-play” offering will give the new company an advantage over leading rivals such as Sky Television, BT and Orange, owned by France Telecom. Sky is 38% owned by News Corporation, the ultimate owner of The Sunday Times.
Full article: http://www.timesonline.co.uk/newspaper/0,,176-1903898,00.html
The coming together of Virgin Mobile and NTL is subject to the cable company completing its merger with Telewest.
NTL will then acquire Virgin Mobile and the cable company's name will be replaced by the Virgin brand and Sir Richard will be the largest shareholder in the new company.
http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2005/12/04/nbrans04.xml&sSheet=/news/2005/12/04/ixnewstop.html
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2005/12/04/cnbran04.xml&sSheet=/news/2005/12
Roger
What I find interesting is where before ntl bought out virgin.net and kept the brand name too for just that bit of the business i.e. on-net customers were still under ntl's broadband but now it seems more like the entire merger of ntl with virgin mobile and using the virgin brand name for all four services for which they will pay branson? Also how this affects the deal with telewest remains to be seen especially funding two mergers and dilutions of shareholder stakes.
No match for domain "VIRGINCABLE.COM".
Yeah that was my thought when I heard the news. I don't have cable but this is the sort of development which would make me reconsider that.
LOL Now that would be hard for Roop to match
Does sound good if Virgin was to take it over, would give the market a kick up the arse and would create a true rival to Sky and BT. Guess it all depends on how much money they are willing to invest in the company
The bomb in terms of the UK tv market for consumers will be bad. If you get two companies slugging it out for every contract you can imagine under the sun (movies , sports etc) costs will shoot up as the bidding goes up and these will get passed onto the consumers.
Virgin mobile as a brand is rubbish , it's tariffs are high and T-mobile have routinely gouged more money from virgin for the rights of being a virtual service, if any future deal fell apart and the company couldn't find an alternative without paying more it brings in trouble for the service.
Look at the new BT Fusion service for mobiles and land lines , it's an absolute rip off in terms of what they want to charge just for the privelege of your mobile being able to take home calls when in range of your house.
The cable broadband services are one of the few good things about ntl.
Merging NTL with Virgin is a risky gamble , hundreds of millions need to be invested in the uk call centres to bring them up to scratch, then you have the combined debts of both the cable companies and virgin.
The OFT case would be pretty long so buying the premiership rights as well would be a gamble if the OFT rules against any part of the merger. It raises the question as well as who would stump up the cash to buy any rights as branson would only own 14% of such a company and isn't going to want to invest a sum greater than his stake holding.
Plenty of cost savings could be made in areas and the virgin brand name is better but restructuring the company will take time and money and need clearence from the oft.
I Dont think the Virgin Mobile Brand is that bad in reality, certainally in view of how long its operated. Certainally no worse than Easynet (the Company who promise a service which can only be provided to 3 people next to the telephone exchange!!)
The UK call centres of ntl or Virgin (if they have any) are no worse than that of BT any of the other mobile operators or Skys rip off 0870 number where you pay to wait 30 minutes on a regular basis, at best a call centre is polite and useless which both these two have been, Sky and BT on the other hand frequently have usless, arrogant liers answering the calls who couldnt give a toss!
All you get in a price war is losers , look at the great newspaper battles of the times v telegraph or sun v mirror , in both cases all the sides came out as losers , the times gained no lead over the telegraph despite being sold for as little as 10p losing tens of millions and the sun and the mirror price wars ended in a costly stalemate. Since then prices of all 4 papers have gone up.
The cable companies even with Virgin don't have a large cash pile to afford to cut subscription charges , even if they did once the money runs out they have to raise the prices again to compensate for the fact if they kept the lower prices they would make a heavy loss.
If there was ever significant savings to be made in the tv sector as a whole then the BBC would lead the way , but at each license fee renewal they ask for more because just like the tv industry as a whole costs either stay the same or go up.
The added competition will hopefully stop the current sky domination, which means one company can't charge the earth for football/tv in general. Competition is good, it keeps everyone in check, drives down prices and increases efficiency in the market as a whole.
1. Virgin Mobile has the highest customer satisfaction levels (source: JD Power survey )
2. NTL flirted with Orange a couple of years ago, this must have been around the time that Orange PAYG handsets were available at Marks and Spencer. I can't remember the tariff deal but I do remember I wasn't tempted. This seems to have died a death.
3. In my assessment, the risk here lies with Richard Branson. If he suddenly discovers that he's now got service delivery problems with his branding on, then this cannot be good news for his empire (trains, planes, automobiles, wedding services etc.) Or is he planning the same size of transformation that he's given the airline industry (new planes) and trains (new trains)?
There's a joke to be made here somewhere about what the Adult channels on NTL-tv would be re-branded, but I can't find it.
1. Price competition - I expect prices to match and under match. There will be a downward pressure. There would have been anyway but it will happen a lot faster.
2. Innovation - this is already exploding in the TV market with diverse products and features - it will be driven much, much harder in order to grab and then retain customers. Sky+ is a Product that actually reduces churn. But it won't stay that way for ever - companies like Sky, NTL and Telewest know that PVR's will be the norm and old hat in a very short time. They need new products to get the consumers excited.
The argument that competition drives up prices is a interesting one. I would imagine that they will be so busy undercutting one another that they will be focussed on reducing dividends to investors to increase growth. The example of the Newspaper battle is an interesting one too. The production costs of those newspapers were massively cut making them affordable and profitable - the circulation wars were part of the ame story. Agreed many Customers didn't want their papers to change at all - and were willing to pay a higher price to retain them - but overall their costs dropped.
We could discuss the true nature of competiton at great length and whether it is of any value to the man in the street - but that is essentially an argument about the success of capitalism and with hundreds of years of history plus the collapse of one of the main non-capitalist states in the world we still can't get all parties to agree that competition and capitalism are positive. Probably best not to try.
What must be clear from both sides of the argument is that this sort of intervention could speed up a process of transformation and change. The issue is whether we will like it. I think we will.
Roger
Branson has money, if needed, to invest in NTL/Telewest. If he sees it as a worthwhile investment, he will spend this. Many NTL areas *badly* need upgrades - they're still analogue, for **** sakes - and Branson has the money to fix that..
To the company staff, this is only good news. To the consumer, this is also good news.
Does anybody know where this would leave Bill Huff?
Do you think that's still true? Virgin Trains have been a disaster. I've travelled with Virgin Atlantic but didn't find them anything special and the last couple of times I've looked at their offerings they've been very expensive. Virgin seem to have been living on past glories for a while.
NTL flirted with Orange a couple of years ago, this must have been around the time that Orange PAYG handsets were available at Marks and Spencer. I can't remember the tariff deal but I do remember I wasn't tempted.
Wasn't that at the time France Telecom owned a stake in ntl and were backing their bid for a 3G mobile licence? When the prices got silly, FT decided it was cheaper to pull the ntl bid and buy Orange instead. ntl offered Orange mobiles for a while but it never really took off.
The quadruple play would only really make sense if you could use your mobile at home at landline or even VOIP rates and then switch to reasonable mobile rates when out and about.
Lets just hope if after alll this NTL (or whatever they are called) does not do what they did post France Telecom investment and p**s all the money up the wall and going bust on paper...
I agree. I think Branson is taking on a big risk. Many of the service delivery problems on NTL are structural and are not easily fixed.
I would not assume that a Virgin-branded business is guaranteed to be a success. Many Virgin ventures have failed or been far less successful than thought. A lot of Virgin products are also built on spin and hype, and very little substance underneath. Nor are Virgin products always the cheapest - ask anyone who travels on Virgin trains.
Are you kidding??!! I travelled form London to a tiny 'Request stop' in north wales using the virgin trains and it was £11.
Thats a 6 hours train journey (had to be done), something like 250 miles!!
Where as it costs me more than that for a 22 minute trip into london city centre!!
Strictly in my experiance, your out of your mind!