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Tom Alexander, the chief executive of Virgin Mobile, is understood to have agreed to stay on as head of the mobile telephone group following a takeover by NTL, the cable operator, that could be announced this week.

The Virgin Mobile board is preparing to recommend a takeover offer from NTL worth about £900m.

The deal offers shareholders three alternatives including 372p a share in cash for the minority investors in Virgin Mobile, which is 71.3 per cent owned by Sir Richard Branson’s privately held Virgin Group. Sir Richard is expected to take 349p a share in cash plus NTL paper for his Virgin Mobile holding.

Both sides are working towards an announcement of a deal at the end of this week. However, people close to the talks warn that the timetable could slip to early next week. NTL, which operates in the UK, is listed on Nasdaq, and is also trying to complete its merger with cable rival Telewest, adding an extra complication to the documentation required.

The plan for Virgin Mobile after the deal is for it to operate as a separate entity in the enlarged group. NTL is understood to have asked the current management to stay on. Virgin Mobile is known for its good customer service, and its marketing and customer service divisions will try and transfer their expertise to NTL, which has suffered from a reputation for poor customer service.

The deal will enable NTL to use the Virgin brand, although details are unclear.

Many of Virgin Mobile’s institutional shareholders, including Fidelity and Morley, have sold down their stakes in the mobile operator, suggesting they believe a recommended deal would not go through at a level significantly higher than the current market price. Virgin Mobile’s shares closed at 369p on Friday.

Virgin Mobile’s top minority shareholder is now Citadel, the hedge fund.

The deal will allow NTL to offer mobile telephone services on top of cable television, fixed line telephony and internet.

Virgin Mobile is being advised by Morgan Stanley. NTL is being advised by Goldman Sachs.

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