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. Last Updated: 07/27/2016

Virgin Group to Offer Mobile Services in Asia




SINGAPORE -- The Virgin Group, Britain's largest privately-held group, is poised for a major expansion in Asia with deep-pocketed Singapore companies as partners.


Virgin announced Friday a 50-50 joint venture valued at $1 billion with Singapore Telecommunications, forming Virgin Mobile Asia to offer services throughout Asia, outside of Japan and Australia.


The deal with SingTel is the second Singapore deal for Virgin chairman and founder Richard Branson within six months, the first being Singapore Airlines' move to buy 49 percent of Virgin Atlantic. The two deals with the cash-rich Singapore firms, in which the Singapore government holds majority stakes, put a total of $1.6 billion into Branson's airline and telecommunications businesses.


Branson said he enjoyed working with the Singapore firms. "We thoroughly enjoyed the relationship with Singapore Airlines and so that was a natural thing to do," he said in reply to reporters questions on how the SingTel deal came about. He said knowing the Singapore Airlines people helped in negotiations with SingTel. "Having the advantage of Singapore Airlines who knew the people at Singtel, they could give me some advice about things ... so that all helped," he said.


Branson said there were other Asian telecoms talking with Virgin Mobile prior to the deal with SingTel, which took about three months to conclude. "SingTel fought very hard. They took the trouble to come into England for a number of occasions. They courted us well," he said.


The venture with SingTel, to set up a Pan-Asian virtual mobile network covering India, China and South Korea, will see the Singapore firm put in the bulk of cash, $450 million in the initial years, and Virgin offering its brand name and $50 million Singapore dollars ($86.5 million).


"They are investing more money than we are and in return what they are getting is the brand and marketing skills of Virgin. We feel it is equitable," Branson said.


On SingTel's recent setbacks on the acquisition front, Branson said: "Maybe it is difficult for a state company to expand overseas sometimes, but it is easier to expand through a vibrant young brand."


SingTel was beaten out of the bidding for Hong Kong's Cable & Wireless HKT and last week saw an attempt to buy into Malaysia's Time Engineering foiled.


Branson said Virgin Mobile aimed to be the world's first global mobile operator, probably within the next 18 months, after finding partners in the United States and Japan. He said the company was currently in talks with a few Japanese firms to expand mobile and Internet operations there. A deal was expected to be reached within three months in Japan, which would be structured along the SingTel deal.


Branson also said the group planned to open more Virgin stores in Asia. "The Internet is one of the principal things that we will be doing. But it will be good to have one or two flagship stores in the main cities," he said.


In Australia, Virgin plans to start its airline operations in July and has just signed a deal to launch Virgin Mobile with Cable & Wireless Optus.


"We have a team of people based in Singapore looking into other areas that Virgin is operating in. I won't be surprised that we will see other moves by Virgin," he said.