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Last Updated: Tuesday, 7 December, 2004, 19:13 GMT
Virgin plans China mobile service
Sir Richard Branson in Hong Kong
Sir Richard is keen to enter the Chinese market
Virgin boss Sir Richard Branson has said the group is in talks with a Chinese company over setting up a mobile phone service in mainland China.

Sir Richard said Virgin had put aside $300m (154m) to invest in a 50-50 joint venture.

"We are in the early stages of discussion. I suspect the whole thing would take 12 to 18 months before we'll launch," he said in Hong Kong.

Virgin is also planning to set up a number of overseas mobile operations.

"We are launching a mobile joint venture in Canada, with Bell Canada in March next year," said Will Whitehorn, a spokesman for Virgin.

"On top of that we're looking at Mexico, South Africa and Nigeria."

Thinking big

The expansion plans for Virgin's mobile services tend to take advantage of high brand awareness in countries where the firm operates, or is planning to operate, flights.

Virgin will be foolish if it is not a player in the (Chinese) market
Sir Richard Branson, Virgin chairman

The business model has worked for Sir Richard in the UK, where the Virgin Mobile business was floated on the stock exchange.

The Virgin Mobile service is marketed directly to consumers, although it uses T-Mobile's network to carry its calls.

Virgin also operates mobile services in the US, where Sir Richard plans a Virgin USA float next year, and in Australia.

Sir Richard was speaking about his Chinese mobile plans in Hong Kong on Tuesday, where he launched Virgin Atlantic's new London to Sydney via Hong Kong route.

"The Chinese market is obviously the fastest-growing market in the world. Virgin will be foolish if it is not a player in the market," Branson told reporters.

Branson said he was in talks with "several companies" in China but Virgin declined to say who they were.
China is a bit like the Wild, Wild West but if Virgin are in early and know how to get round the regulations, it could be a really big opportunity
Lars Vestergaard, IDC

China has more than 300 million cellular subscribers. China Mobile has about two-thirds of the market and China Unicom about one-third.

In addition, China has nearly 75 million users of a low-cost limited-roaming service called "Little Smart," which is provided by several fixed-line operators.

Wild, Wild West

Lars Vestergaard, head of European wireless research at analysts IDC, said: "Virgin has gone through hard times with some of its mobile joint ventures, including the one in Singapore it had to get out of.

"China is a bit like the Wild, Wild West but if Virgin is in early and knows how to get round the regulations, it could be a really big opportunity.

"However, my feeling is the market is going to be highly regulated. They will have to set up a local operation with a lot of local staff."

Virgin spokesman Mr Whitehorn said the Chinese venture would be completely separate from Virgin's US, UK and Australian mobile arms.

3G looms in China

The Chinese government is expected to reveal sometime next year how many licences it will issue for third-generation (3G) mobile services, with market watchers expecting three or four different 3G operators to emerge.

"We would be certainly interested in 3G," Branson said.

Mobile virtual network operators like Virgin Mobile are expected to multiply in the 3G world. Mobile operators, which have spent billions of euros on 3G licences will be keen to recoup costs by selling large chunks of airtime.

On Tuesday Atos Consulting, the consultancy arm of Paris-listed computer services company Atos Origin, announced it would work together with Vodafone to deliver mobile data services to joint corporate customers.

Vodafone Mobile Connect cards plug into a laptop and can connect to the internet, email or corporate networks using 3G or 2.5G, often referred to as General Packet Radio Services (GPRS).

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