NTL planning Virgin Mobile merger

Deal will change competitive landscape

NTL wants to create a 'quadruple' play telecoms company

Cable services group NTL has made an £835m offer for Virgin Mobile, part of Richard Branson's Virgin Group.

The takeover proposal is aimed at creating a media and telecoms group capable of operating in the fixed and mobile marketplaces, as well as offering broadband internet and cable services.

Julian Hewett, chief analyst at Ovum, says the deal, if it comes off, represents an exceptional opportunity to extend the Virgin brand into the heart of the UK's television and entertainment market.

'At the same time, the Virgin brand will have a lot more customer appeal than the NTL or Telewest brands, both of which have suffered from customer service problems,' he said.

'However, Virgin Mobile mostly has low-spending pre-pay customer, which are not well suited to conversion to a quad-play contract.'

The deal has been met with a lukewarm response in the City, amid concerns that the integration of Virgin Mobile into NTL, which also recently announced a merger with fellow cable company Telewest, may prove complicated.

Earlier this year, BSkyB acquired broadband provider Easynet for £211m to sell internet services to its own customers.