NTL buys Virgin Mobile
UK cable operator NTL announced that it will buy Virgin Mobile, a cell phone company, for $1.7 billion. The new company will be able to offer the so-called "quadruple play" of electronic services: television, Internet, and both wired and wireless telephones. The new company will use the Virgin brand name (leased from Richard Branson for 30 years).
NTL bought "triple-play" rival Telewest earlier this year, expanding its customer base to 4.3 million. The move puts it in a position to challenges TV company BSkyB cable (News Corp.) as well as phone companies BT and Vodafone. No other British company can offer all four services, though BT is working on the TV angle (it has the other three), while BSkyB is getting more involved in broadband Internet services. Smaller British players (such as Bulldog, Carphone Warehouse, Homechoice, and UK Online) that offer some or more of these technologies are likely acquisition targets, especially for cash-rich Vodafone.)
Virgin Mobile has 16 million subscribers With a strong focus on customer service, it is the most admired brand in Britain. That me help the company, which, according to one report,
has been dogged by persistent customer complaints about its service, with some disgruntled users dubbing it "NTHell".
Branson has made a fortune selling off his branded conglomerate piece by piece over the last 15 years. As an article on the This is Money website points out:
"In 1992 Virgin Records was sold to EMI, in 1997 Virgin Radio went to Chris Evans, in 1999 he disposed of a 49% stake in Virgin Atlantic to Singapore Airlines and now he has sold on Virgin Mobile to NTL in a £962m deal."
As the media get more blurry (phone service over the Internet, TV shows on your cell phone), the bet is that confused customers will want to single-source. Cell phone companies already engage in what is called "confusion pricing," offering a variety of complex plans that make choosing a service rationally all but impossible. Imagine what the quad-play companies will be able to do with combinations and permutations of their services ("if you take this pay cable station, we'll add 500 prime time minutes to your cell phone service.") In fact, one rival, Carphone Warehouse, is offering free broadband to compete in the tightening field. BSkyB is thinking about following suit.
6:48:38 PM 
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