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Last Updated: Wednesday, 7 December 2005, 23:06 GMT
Virgin Mobile snubs first NTL bid
Sir Richard Branson
Sir Richard Branson is the majority shareholder in Virgin Mobile
Virgin Mobile's board has rejected a 817m ($1.4bn) takeover offer from NTL, saying it undervalued the company.

Most analysts said the decision suggested that Virgin Mobile was now hoping that the cable operator would return with a higher offer.

Virgin Mobile is 72% owned by entrepreneur Richard Branson, who has already voiced support for the deal.

NTL wishes to add Virgin's mobile phone facilities to its existing offering of TV, fixed line phones and broadband.

'Bidding war'

Mr Branson owns 72% of Virgin Mobile though his Virgin Group, whose representative on the Virgin Mobile board absented himself from the decision to reject NTL's approach.

"The board has concluded that the potential offer materially undervalues Virgin Mobile," the company said in a statement.

NTL, which hopes to adopt the Virgin brand, was not immediately available for comment.

Other analysts thought Virgin Mobile might now wish to see rival bidders come forward.

"Virgin is trying to start a bidding war by rejecting the offer on the premise that the price isn't right rather than saying the company is not for sale," said Charter Equity Research analyst Ed Snyder.

NTL confirmed on Monday that it had approached Virgin Mobile, and that it had the support of Virgin Mobile's network provider T-Mobile.

The cable operator has TV, telephone and internet customers in about five million UK households, and in October announced plans to merge with rival firm Telewest.

Virgin Mobile is the UK's fifth-largest mobile phone carrier and has more than five million customers.

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