Virgin in Sprint venture

June 11, 2001
Web posted at: 2025 GMT

NEW YORK (CNNfn) -- Virgin Mobile has inked a joint venture agreement with Sprint Corp. to launch a mobile phone service under the Virgin brand in the U.S., press reports said Monday.

The agreement will allow Virgin Mobile to sell services over the Sprint nationwide network. Virgin Mobile, a unit of U.K.-based Virgin Group, and Sprint will jointly own the new company. The company will cost about $1 billion to finance, the New York Times said.

An agreement is expected to be announced by the end of June, the Wall Street Journal said.

The new company is close to signing up consumer electronics chain, Best Buy Co. Inc., as a retail partner, the New York Times said.

"Virgin is progressing on a deal to launch a mobile venture in the United States," Virgin spokesman Will Whitehorn told CNN, who declined to confirm the Sprint reports.

Kansas City-based Sprint (FON: down $0.12 to $20.81, Research, Estimates)  also declined to comment.

Virgin Mobile is one of the fastest growing virtual mobile operators in the U.K. The unit doesn't own telecommunications networks but sells services. So far, Virgin Mobile has racked up more than one million subscribers, the Journal said.

Virgin Mobile is part of Sir Richard Branson's empire, which also includes holdings in Virgin Atlantic Airways. Branson has secured a loan from Lloyds TSB and is using his 51 percent stake in the airline, valued at $480 million, as collateral, Whitehorn said.

The loan will be used to finance, in part, Virgin's advance into the U.S. mobile market. Virgin will use $10 million to pay for the joint venture but will likely seek financing from banks and private investors, the New York Times said.

Minneapolis-based Best Buy (BBY: down $2.70 to $59.75, Research, Estimates)  declined to comment.

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