Virgin Mobile USA mulling float

VIRGIN Mobile USA is reportedly considering a flotation that could value it at £1.1bn. Although officially refusing to comment, the company is believed to have talked to US bankers over how to release cash from the business, with a stock market float towards the end of next year the favoured option.

JP Morgan and Morgan Stanley, the two banks that advised Virgin Mobile‘s UK float, are thought to be among of five banks being considered to control a possible US float.

The UK's Virgin Group is watching US market conditions and the share performance of its UK mobile business before it makes a final decision.

The UK mobile phone arm published positive results last week, sending its share price above the launch price for the first time.

Half-year profits rose 14% to £47.3m. The customer-base hit 4.6m, having attracted a further 647,500 people in the six months to the end of September.

Virgin, however, said it was yet to feel the full impact of a cut in termination rates - the price firms charge each other and landline operators for putting callers through to customers.

Service revenues grew 25% to £230.7m in the first six months of its financial year, but are expected to slow to the low to mid-twenties in the second half.

Virgin Mobile USA has gained a strong foothold in the market, building up a 2m customer base since launching in the first half of 2002.

It operates on a pay as you go basis only, previously rare in the US.

The company is a joint venture between Sprint of the US and Sir Richard Branson‘s Virgin Group.

A Virgin Mobile spokesman said: 'It‘s quite speculative at the moment and as far as the US business is concerned, it‘s far too early to say.'