Tata Teleservices (TTSL), has agreed to buy out Virgin Group's 50 per cent stake in MVNO Virgin Mobile India for an undisclosed amount, sources close to the development told India's Hindu Business Line.
The report, which cited unnamed source, said that the UK-based company, which has experienced significant success as an MVNO in the UK, will sell its share in the joint venture but TTSL will continue to use the Virgin brand for the foreseeable future via a separate agreement by which Tata pays Virgin a royalty.
According to the Business Line, a TTSL representative declined to comment.
Virgin Mobile India launched in March 2008 on TTSL's CDMA network and began GSM services in January 2010. It exclusively targets the youth market and has launched innovative services including one which rewards consumers receiving incoming calls with a credit to their account balance.
At the beginning of 2009, the company had set a target of 10 per cent market share and had claimed that the youth sector would add 50 million subscribers and garner around €5.46 billion in revenue by 2010. However, analysts cited by the Business Line point to TTSL's ever-strengthening relationship with equity holders NTT DoCoMo, as evidence that interest in the Virgin venture was waning.
Should Virgin Mobile leave India, it would not be the first time Virgin had chosen to cash in its assets and sell to its host network, while continuing to licence the brand. In 2006, Virgin sold its share in its Australian joint venture to Optus, and in 2009 it sold its mobile operations in Canada and the US to Bell Mobility and Sprint for a reported CAN$142 million and $483 million, respectively. Conversely, in February this year Virgin upped its share in Virgin Mobile South Africa to 55 per cent as host network Cell C sold its 50 per cent stake in the Virgin Mobile joint venture to Virgin Group and Calico Investments of the Bahamas, which acquired the remaining 45 per cent stake in the company.
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