Listen to this article
Shares in British Sky Broadcasting, the satellite broadcaster that is part of Rupert Murdoch’s media empire, fell on Monday after NTL, the UK cable operator, launched an £817m ($1.42bn) bid for Virgin Mobile.
NTL’s offer for the Virgin mobile phone brand raises the competitive threat to BSkyB as the rivals seek to become one-stop providers of television, internet access and telephony services to customers. NTL is likely to have to wait until the end of the week before finding out whether Virgin Mobile’s board will accept its bid for the mobile operator.
Investors and analysts were sceptical that the offer, at 323p per share in cash, would be accepted by the board and Virgin Mobile’s shares closed almost 10 per cent higher at 342½p in London. BSkyB’s fell 2.8 per cent to 491p. Vodafone shares fell initially, before recovering to close higher after Sir John Bond, outgoing chairman of HSBC, the banking group, was confirmed as the UK mobile phone group’s next chairman.
The cable company, which is in the process of merging with rival Telewest, said it had received “verbal assurances” from Sir Richard Branson’s Virgin Group, which controls 72 per cent of Virgin Mobile, that, if its offer was successful, it would accept NTL shares in exchange for most of its stake. The move is expected to lead to Sir Richard, one of the UK’s best-known entrepreneurs, taking a 12 to 15 per cent stake in any enlarged group.
Simon Duffy, chief executive of NTL, wants to add Virgin Mobile to his company’s offering of fixed-line telephony, TV and broadband as part of a strategy known as “quadruple play”, which is designed to increase customer loyalty and provide an attractive distribution model for content. NTL is also in discussions with Virgin Group about using the Virgin brand across all its services.
The move is seen as a potentially big threat to rivals such as BSkyB and BT, the incumbent telecoms operator, which is trying to branch out into areas such as broadband TV.
Get alerts on Media when a new story is published