Optus acquires Virgin Mobile Australia
The Australian unit of Singapore Telecommunications Ltd, Optus has announced that they are acquiring 74.15% stake in Virgin Mobile Australia Ltd. This would increase their stake in this company to 100%. However, market analysts believe that this move is not likely to affect the companyâ€™s bottom-line.
Optus added in a statement that they are paying A$30 million to Richard Branson’s Virgin Group for this added stake in the company. Virgin Mobile Australia started its operations in the country in 2000 as a joint collaboration between the two companies. The deal would be done in a cash transaction and should see Optus buying out existing debt of GBP1.3 million owed by Virgin Mobile Australia to Virgin Group.
Optus has been struggling in their Australian operations due to stiff competition from other local players. The move would help them cut costs and remove the excessive costs in their operations to streamline their businesses. Virgin on the other hand would continue to have an Australian venture, which goes by the name of Virgin Mobile and operates on Optusâ€™ network.
The deal however would be disappointing for the Virgin Group owner Richard Branson considering he would be taking a loss in the deal. Optus gains even more as they get the rights to use the Virgin Mobile brand in Australia for 15 years. Warren Hardy, managing director of Optus Wholesale and Satellite added: “VMA (Virgin Mobile Australia) will continue to provide simple and easy to understand offers. We expect the acquisition and ongoing license to lead to growth in market share.â€