German-owned cellphone group T-Mobile is to sell its 50% stake in UK mobile phone joint venture Virgin Mobile, paving the way for a flotation.
The sale paves the way for a stock market flotation of Virgin Mobile
The Deutsche-Telekom arm will surrender its Virgin Mobile holding to Virgin Group, ending a long-running legal row between the two partners.
In return, T-Mobile will secure 25% of the proceeds if Virgin Mobile floats within the next two and a half years.
Industry experts reckon Virgin Mobile could be valued at as much as £1bn.
Virgin's entrepreneur boss Richard Branson has been keen to prepare Virgin Mobile, the UK's fifth-largest mobile phone group, for a stock market debut.
Deutsche Telekom's stake sale brings to an end a bitter battle over the amount of money T-Mobile paid Virgin Mobile for marketing support.
T-Mobile launched a court case against both Virgin and Virgin Mobile in 2002 with the aim of terminating their joint venture.
Virgin counter-sued, accusing T-Mobile of not honouring the terms and conditions of their partnership, which, it claimed, restricted Virgin Mobile's ability to offer customers more advanced mobile data services.
T-Mobile is now freed from paying monthly "marketing support" fees to Virgin Mobile.
Now their differences have been resolved, the two partners have agreed to a new telecoms supply contract running for a minimum of 10 years with "enhanced commercial terms for both parties".
Virgin Group chairman Richard Branson said: "This is an exciting beginning to 2004 for Virgin Mobile - and it's going to get even better."
T-Mobile UK managing director Brian McBride said: "This is a great deal for T-Mobile, for Virgin and for Virgin Mobile. It provides substantial benefits for all parties."