Richard Branson personally gains about £7m and enough shares to become the largest single shareholder in ntl. Virgin’s network partner, T-Mobile, says it is happy with the deal.
As part of the deal, ntl has a 30-year exclusive brand licence with Virgin Enterprises Limited to use the Virgin name for the cable’s operator consumer business in return for a royalty of 0.25% of that business. This is worth at least £8.5m a year to Virgin Enterprises.
Virgin also gets a seat on the board and the right to insert a top marketing executive into ntl – duties unspecified, but obviously it makes sense to take advantage of one thing that Virgin Mobile has proved particularly adept at. Branson will be available for promotional duties.
ntl’s interest of course is in “creating a quad-play champion”, as its presentation put it, and supporting the one-stop-shop mix of TV, fixed-line telephony, mobile, and broadband with “the most admired brand in Britain”. Cross-selling will increase sales; the more products ntl has to sell, the less churn it will experience. As ntl chairman Jim Mooney put it, “there are incremental opportunities for our business”.
The increase in size will also enable the business to “compete more effectively with the large incumbents in the UK telecommunications market” – BT and Sky were mentioned specifically – and to develop further services. In the short term those will probably include Virgin TV. Certainly ntl will be bidding for some sports rights, including a share of the Premier League action.
Single-billing will start to come in after the summer, perhaps with a dual-mode VoIP/mobile handset this year as well.
The interesting aspect of the whole branding issue is the apparent disparity between Virgin Mobile’s high status among consumers and ntl’s patchy record of customer service. ntl claims to have turned this around anyhow, but the new branding certainly can’t hurt its appeal in this area.
At the press launch Branson said he was confidence that “these issues will be a thing of the past” by the time the Virgin brand is on ntl services – partly because Virgin Mobile people are to be drafted in to spruce up ntl’s customer service. At the analysts’ briefing we were promised “significant participation from the Virgin Group and Virgin Management to secure Virgin culture and ideals throughout the [ntl] organisation”, leading to “significant operational improvements … and improvement in customer care”.
Richard Branson flies in (or rather is lowered down the front the Virgin Megastore on the Champs Elysees) to sort out the French with bargain-price texting
The day before the ntl sale was announced, Virgin Mobile France was launched – a joint venture between Virgin Mobile, The Carphone Warehouse and an existing local MVNO in Brittany.
The business launched with the promise of cheaper calls and (especially) text messaging. Virgin Mobile France is offering unlimited free texting to any network 24/7; that applies to the first 35,000 customers, but if the network can take the strain it will be extended.
Calls with Virgin Mobile are also cheaper than on the main networks, which were characterised at the launch as ripping off French consumers with high charges and poor services.
As Branson put it, tariffs from the French majors are loaded such that “80% of the people are being screwed so that 20% can get a good deal”.
Virgin Mobile France will offer both prepay and contract services, initially through around 1,000 outlets including CPW’s Phone House chain. It has set itself a target of a million customers within the first three years, with senior management already describing that as modest.
The network supplier is Orange, signed up apparently as a result of Carphone Warehouse’s contacts with the local management. Branson told us that all the networks in France – including Orange – had been rebuffing him for some time before the breakthrough was made.