The approach, announced by NTL yesterday, boosted shares of Virgin Mobile by eight per cent on hopes of a counter-bid from a rival mobile carrier or a sweetened offer from NTL.

Under terms of the offer, which values each Virgin Mobile share at 323 pence in cash, billionaire entrepreneur Richard Branson, who controls Virgin Mobile, would become NTL's largest shareholder with a 14 per cent stake.

The tycoon has told NTL that he would exchange his holdings for NTL shares, and perhaps a small portion in cash, if the transaction proceeded.

"We'd love to be involved with the creation of something very special, something quite large and something quite exciting," Branson told reporters at an event in Shanghai to promote Virgin Atlantic Airways.

Acquiring Virgin Mobile would allow NTL to add mobile services to its existing "triple-play" line-up of TV, Internet and telephone services, giving it a potential advantage over rivals such as BT Group Plc and satellite broadcaster BSkyB.

It would create a group with around nine million customers and provide a powerful new brand for NTL, which agreed to buy its smaller rival Telewest earlier this year to create a single UK cable company.

Virgin brands, which have spanned airlines, pensions, cola and condoms, have a reputation for customer service that UK cable companies have never matched.

An industry source said, however, that the Virgin Mobile board might hold out for a better price.

Analysts cautioned that NTL faced a difficult task in simultaneously managing two major acquisitions if the Virgin Mobile deal proceeds.

"We would not underestimate the integration and co-ordination required to make this three-way (NTL, Telewest, Virgin) merger work smoothly, but on a two to three year view, the enlarged group could pose more of a competitive threat to BSkyB," Numis analyst Lorna Tilbian said.

NTL is Britain's second-largest pay-TV operator behind Sky and the second-largest residential telephone service provider behind BT.

Virgin Mobile is Britain's fifth-largest mobile phone carrier.

- Nampa-Reuters

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