Reports: Virgin cell phone unit in talks with Sprint

Monday, May 7, 2001 | 11:02 a.m.

SUN STAFF AND WIRE REPORTS

LONDON -- Virgin Mobile is in talks with Sprint to create a joint cell phone venture that would be the British company's first foray into the U.S. telecommunications market, people close to the discussions told the New York Times Sunday.

Virgin Mobile, controlled by entrepreneur Richard Branson, has earmarked $1 billion for expansion in the United States, and a team of Virgin executives based in San Francisco has been negotiating with several operators, including Nextel and AT&T, for the last few months, these people said.

But discussions with Sprint have progressed the furthest, they said.

The publication Sunday Business in London reported Virgin and Sprint executives are to meet again this week and an agreement could be reached within two weeks. People close to the talks cautioned, in interviews with the Times, that a deal was not imminent and said the discussions could still fall through.

Steven Day, a Virgin Mobile spokesman, declined to comment. A spokesman from Sprint was not immediately available.

A deal with Sprint would be structured along the lines of a 2-year-old agreement between Virgin Mobile and One-2-One, a British mobile operator owned by Deutsche Telekom, in which both companies contributed about 50 million pounds ($72 million) each to form a joint venture. The jointly owned company uses the One-2-One network but sells cell phone handsets and services under the Virgin Mobile name.

An agreement with Sprint would be the latest move in Branson's ambitions to build a global operator that extends the Virgin brand but is not saddled with the costs of building and maintaining networks. Virgin Mobile made its first overseas foray last summer, when it announced a partnership with Singapore Telecom.

By the end of the year, it had reached a deal with Optus, the Australian operator that Cable and Wireless is selling to Singapore Telecom. And last month, Virgin announced a partnership with Pelephone of Israel.

Sprint, the third-largest U.S. long distance company, is based in the Kansas City area. It sells mobile phone services through its Sprint PCS unit and is the dominant local phone company in Las Vegas. Sprint PCS has about 11 million customers. Virgin Mobile is just one part of the closely held Virgin empire masterminded by Branson, selling everything from music to air travel to soft drinks. Branson's Virgin Atlantic Airlines offers non-stop flights between London and Las Vegas and Branson has been interested in establishing a Las Vegas hotel-casino.