Sir Richard Branson’s Virgin Group has sold its 74% stake in Virgin Mobile Australia Pty Ltd to its venture partner, Optus, for approximately AUD 30m ($22m).
Under the terms of the deal, Optus will also make ongoing payments for a 15-year license to use the Virgin Mobile brand. Optus agreed to maintain Virgin Mobile Australia’s market focus, management team, and customer base as a distinct entity.
Virgin created the Australian virtual network operator in October 2000 as a 50:50 joint venture between Optus and Virgin Group. In 2002, Virgin Group increased its shareholding to 74.15% and the operator rapidly became Australia’s leading virtual mobile network. The VNO has over 600,000 customers and employs over 350 people across Australia. It rents network capacity from Optus the Australian mobile operator owned by Singapore Telecommunications Ltd, southeast Asia’s largest phone company.
Virgin Mobile will continue to provide simple and easy-to- understand offers, said Warren Hardy, managing director of Optus Wholesale and Satellite. We expect the acquisition and ongoing license to lead to growth in market share.
Optus reported that the Virgin Mobile business generated AUD 189m ($143m) in revenue for the year to December 31 with earnings before interest, tax, depreciation, and amortization of AUD 1.3m ($982,000).
Meanwhile, the stalled purchase for 817m pounds ($1.42bn) of Virgin Mobile Plc, the UK’s fifth largest mobile operator by UK cable giant NTL Inc, continues to attract attention after shares in the UK operator fell sharply after one its biggest institutional investor sold a large tranche of stock.
In early December, NTL offered 323 pence ($5.61) in cash for each Virgin Mobile share, which represented a 3.9% premium to Virgin Mobile’s closing price on the day before the deal was announced. The deal was backed by Virgin Mobile’s largest shareholder, British entrepreneur Sir Richard Branson, who has a 72% stake in the operator.
However, the small premium did not impress Virgin’s minority shareholders who control 28.5% of the operator, and a week later the operator’s management team rejected the offer. The minority shareholders include Fidelity, Morley Asset Management, Deutsche Asset Management, and boutique fund manager Aberforth Partners. It is believed that Aberforth Partners has offloaded 9 million shares at 362 pence ($6.39).
The fact that one of the shareholders has parted company with the remaining minority shareholders seems to indicate that NTL will not have to raise its offer to 400 pence ($7.05) a share, a price mooted in the press at the weekend, in order to close the deal.