Virgin to end long-running T-Mobile saga - soon

13 Jan 2004

The long-running legal dispute between Virgin Group and T-Mobile over the terms of their network sharing agreement could finally come to an end this week, with the announcement that both sides are set to reach an out-of-court settlement. If completed the deal will pave the way for an initial public offering (IPO) of the UK’s MVNO operation Virgin Mobile. Despite Sir Richard Branson’s desire to list the cellco, plans for its flotation had to be put on ice while the legal wrangle rumbled on. However, it is now expected that the out-of-court deal will see Deutsche Telekom-owned T-Mobile agree to sell its 50% stake in Virgin Mobile to Virgin Group in return for an initial upfront payment from the sale of its interest with the balance to follow subject to the outcome of a successful IPO. Virgin Mobile has around 3.5 million UK customers and has been valued as high as GBP1 billion.

Virgin Group and T-Mobile have also inked a fresh and more comprehensive network sharing deal, that is designed to remove the threat of further legal disputes, and will see the network operator continuing as the sole provider of voice calls for the next few years. Under the terms of the new agreement, a controversial clause requiring T-Mobile to make fixed monthly payments to Virgin to compensate for revenues the former received for incoming calls has been taken away. Instead Virgin Mobile will receive payments in relation to the actual value of the inbound call.

United Kingdom, T-Mobile UK, Virgin Mobile UK