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Virgin On Expansion

Light Reading
LR Mobile News Analysis
Light Reading
10/31/2002

Richard Branson's Virgin Group is looking to launch more mobile businesses in Europe, with France and Scandinavia at the top of Dickie's list, according to the CEO of U.K. service provider Virgin Mobile Telecoms Ltd.

Tom Alexander, who has been the top dog at Virgin Mobile's U.K. concern since it launched in 1999, told Unstrung in an exclusive interview (see Branson's Main Man) that France has all the hallmarks of a country ripe for the Virgin mobile treatment and is under serious consideration. "The Virgin brand is very strong in France. The [music] megastore in Paris is the most successful in the world. Don't expect to see Virgin Mobile in France in the next few weeks, but it is a country with a lot of the right criteria for us," says Alexander, who has been "instrumental" in Virgin's mobile forays into Australia, Singapore (already closed down – see Dictionary Corner: Review), and the U.S. in the past two years.

Scandinavia is the other European zone in Virgin's sights, and Virgin has already admitted it is looking at making a bid for the mobile assets that Telia AB has to sell in Finland before it can merge with Sonera Corp. (Nasdaq: SNRA) (see Europe's 3G Fire Sale). "The places at the top of our list [for expansion] are at the bottom of everyone else's. Scandinavia, for example. Most people think we're mad. Sweden, Norway, and Finland are highly penetrated, sophisticated markets that are very interesting to us. The opportunity we have with Finland is that it could be a bridgehead for us into Scandinavia. What is important is that you need to have a hub. If we weren't interested in the other Scandinavian countries too, we wouldn't be [looking at the possibilities in Finland]," says Alexander.

He also has some interesting things to say about T-Mobile (UK), the network operator that is Virgin Group's 50-50 partner in Virgin Mobile U.K. "I think we have an interesting relationship with T-Mobile, Obviously it's a shareholder, it's a supplier, and it's a competitor. With Virgin Mobile doing very well, that raises a very interesting competitive tension."

Alexander can also see frustration down the line when it comes to launching data services that need a 3G network to deliver full functionality, as Virgin Mobile is reliant on T-Mobile for all of its network capacity and spectrum. "We are reliant to a certain degree on our relationship with T-Mobile. We want to be sure they are one of the front-runners." However, he believes there may be some frustration looming when it comes to the network operator's pace of rollout. "T-Mobile was quite late in launching GPRS, much later than all the other players, so we'll see how things develop into the 3G arena."

Domestic strife, we believe that's called.

The interview covers matters relating to the U.K. market, Virgin's international expansion plans, data services, the importance of handset developments, and the interesting tension between brand royalty and the quality of certain carbonated drinks. "Do you drink Virgin Cola?" asks Unstrung. "No. It's too sweet," answers the Virgin man, incorrectly. Just don't tell Richie.

— Ray Le Maistre, European Editor, Unstrung
www.unstrung.com

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