A 50:50 joint venture company, called Virgin Mobile (Asia) Pte Ltd, will be formed and headquartered here to oversee the regional business. SingTel Mobile and Virgin will each come up with US$50 million to provide an initial investment of US$100 million by August, when the agreement is expected to be finalized.
Virgin Mobile is expected to roll out services in Singapore, Hong Kong and South Korea in the first quarter of 2001. Expansion into India, China, Thailand and Malaysia is also in the pipeline.
"These (Singapore, Hong Kong and South Korea) are three of the most developed markets in Asia where cellular demand remains high," said SingTel Mobile CEO Lucas Chow. He added that the three markets have a combined population of 55 million, and an average cellular penetration of less than 50 percent each.
Virgin Mobile will function as a regional virtual mobile network operator, buying cellular airtime from local cellular service providers in each market such as SingTel Mobile in Singapore. Locally, Virgin Mobile will also compete with SingTel Mobile.
"We will try to offer diversity and quality in our mobile packages (which) will be announced in three months. They will be competitive and innovative," promised Virgin Group chairman Richard Branson.
Branson was very upbeat about the joint venture. "What (SingTel has) done is invest in a young, vibrant brand to allow them to expand in the region... it may be difficult for a state company to expand overseas," he said.
Richard Chiam, an analyst with Vickers Ballas, concurred with Branson's view. In Chiam's opinion, the tie-up will leverage on Virgin's brand name, and avoid the SingTel name, "which is associated with the Singapore government."
The perceived government link could have played a part in the failure of SingTel's recent attempts to buy stakes in Malaysia's Time Engineering Bhd and in two of its units and to merge with Hong Kong's dominant telco, Cable & Wireless HKT Ltd.
Branson expects to get 3 million subscribers in Singapore, Hong Kong and South Korea in Virgin Mobile 's first four years.
In addition to mobile phone services, the new venture will offer both broadband and dial-up Internet access services in Singapore.
Virgin is one of the world's best known brand names with businesses that include transport, travel, consumer retailing and telecommunications. Last December, Singapore Airlines acquired a 49 percent stake in Branson's Virgin Atlantic Airways Ltd.
In response to media queries, Branson said Virgin has no plans to buy into SingTel or collaborate with SingTel to buy into HKT.
Play video
There are currently no comments for this post.