Virgin in $1bn US mobile phone deal: reports

It is thought to be a 50/50 joint venture, would enable Virgin to establish a foothold in the US, which is seen as the last great untapped mobile telephone market in the developed world.

The group is thought to have allocated around $50m (£36.2m) for the start-up phase of its US venture.

It is thought to be targeting the under 35s in the US, focusing particularly on the under-20s, 25 million of whom are expected to own a mobile phone by 2005.

A spokesman for Virgin would not confirm the alliance, but said: ‘‘We are progressing with a deal in the US and we hope to make an announcement soon.’’

Virgin already has mobile ventures in the UK, a joint venture with Optus in Australia, and one with Singapore Telecom in Singapore, Hong Kong and South Korea.

The new deal would bring the group closer to its aim of running a worldwide ‘‘virtual’’ mobile phone network, in which it uses existing mobile phone networks to run its own service.

Virgin Mobile already has a similar joint venture in the UK with mobile operator One2One.

It was also revealed today that Richard Branson has used his stake in airline Virgin Atlantic as a security against a loan he had taken out to invest in his new businesses.

He has borrowed £50m from Lloyds TSB to put into ventures including his mobile phone operations, his low-cost airline in Australia Virgin Blue, and Virgin Active, a chain of health clubs in South Africa.

But a spokesman for the group dismissed speculation that this was an unusual move for Branson, describing it as ‘‘completely normal business practice’’, and something the entrepreneur had done in the past.

Branson currently holds a 51% stake in Virgin Atlantic, which was launched in 1984, after he sold 49% to Singapore Airlines last year.