BCE.T T.T etc UPDATE 1-Virgin launches Canadian mobile service
Tue Mar 1, 2005 06:16 PM ET
(Adds details; figures in U.S. dollars unless noted)
By Rachelle Younglai
TORONTO, March 1 (Reuters) - Billionaire entrepreneur and adventurer Richard Branson launched his Canadian mobile phone service on Tuesday and said he plans to take his Virgin Mobile USA business public later this year or early next.
The flamboyant 54-year-old kicked off the launch with a publicity stunt in downtown Toronto: sliding down a wire into a monster truck and then crushing a set of cars while a number of scantily-clad women waited in the wings.
Virgin Mobile Canada, like Branson's other mobile ventures, targets teenagers and young adults by offering low-cost, simple pricing and no contract deals, with features such as musical ring tones and text messaging.
The Canadian operation also promises "no monthly service charge" for voice mail, call display and call waiting.
Last March, British-based Virgin Group announced it would partner with Canada's BCE Inc. (BCE.TO: Quote, Profile, Research) , the country's largest communications company, in a $106 million joint venture using BCE's Bell Mobility network.
But whether Branson's antics, marketing campaign and telephone service will be enough to compete against established rivals like Rogers Communications Inc. (RCInvb.TO: Quote, Profile, Research) and Telus Corp. (T.TO: Quote, Profile, Research) , remains to be seen.
"If they can offer me a better deal I will switch, but I don't think they can," said 25-year-old Warren Ganza, as he held up one of his phones to capture a picture of Branson suspended from a wire. "I get free service with Rogers and Telus."
Branson, for his part, points out that about half the Canadian population has not bought a mobile phone. He said he expects to get more than 2 million customers over the next few years.
Later, he told reporters he plans to take his Virgin Mobile USA public.
"We don't have a specific date yet, but I would say later this year, or early next year, we will have Virgin Mobile USA launched," Branson said.
Virgin Mobile USA is a joint venture with U.S. cellphone operator Sprint Corp. (FON.N: Quote, Profile, Research) . Branson has been expected to take it public since listing his British phone company, Virgin Mobile Holdings Plc (VMOB.L: Quote, Profile, Research) , in London last July.
A Financial Times newspaper report has valued a U.S. initial public offering at around $2 billion.
Branson said J.P. Morgan and Merrill Lynch were acting as U.S. financial advisers. "When we decide to float, it's possible we might bring in one or two others as well."
The company has about 3 million customers and is one of two firms aimed directly at the U.S. youth market. The other is Boost Mobile, owned by Nextel Communications (NXTL.O: Quote, Profile, Research) .
Branson said he plans to float a minority stake and brushed off suggestions that Sprint's acquisition of Nextel would hurt the companies' relationship.
Sprint is set to own 100 percent of Boost after it buys Nextel, a deal expected to close in the third quarter. Boost has about 1.2 million customers and uses Nextel's network, while Virgin Mobile USA uses Sprint's network.
"We have a superb relationship with Sprint and if they do acquire this other company it will largely benefit us because it will bring the cost of the distribution, the network down, which will help us reduce our costs and hopefully reduce the charges we pass on to the consumer," Branson said.
(Additional reporting by Sinead Carew in San Francisco) |
