T-Mobile and Virgin reveal details of entente

And a Virgin Mobile IPO could net £100m for T-Mobile

T-Mobile and Virgin Group are friends again. The two companies, which set up Virgin Mobile together using T-Mobile’s UK network and Virgin’s brand and marketing expertise, had been arguing for a number of months over how the mobile virtual network operator (MVNO) is run.

However, the companies today said they have brokered a 10-year supply agreement with "enhanced commercial terms for both parties".

Numbers involved in the deal have not been disclosed but it sees Virgin take 100 per cent ownership of the business. It was previously a 50:50 joint venture.

An initial public offering (IPO) of Virgin Mobile stock is in the offing this year and it has also been agreed that T-Mobile will get 25 per cent of any value above £550m, up to a maximum of £100m, "in the event of any future value realisation of Virgin Mobile, within the next two and half years". This would seem to also cover any trade sale, although that would be an unlikely event despite Virgin Group’s historical dislike for public markets.

A current poll on silicon.com shows around 20 per cent of readers reckon a flotation could be ‘the most exciting IPO of 2004’.

T-Mobile UK MD Brian McBride talked up the new agreement and played down any past wrangling, stating in an official release that "it's been a pleasure dealing with the Virgin team".

Virgin Group founder Richard Branson also welcomed the deal, calling Virgin Mobile "an exceptional company".

And it’s not the only thing the team at Virgin Mobile have had to smile about this week. Two days ago the MVNO announced bumper results showing it has been the fastest-growing UK operator over the past two years. It signed up over half a million new customers in the traditionally busy quarter leading up to Christmas and counted 3.6 million users as of 31 December 2003.

As well as such growth, the company has also been consistently praised for levels of customer service that top those of rival networks.

Virgin Mobile will now turn its attention to developing a full data strategy - looking to tap 2.5G and 3G technologies.