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- MediaGuardian,
- Thursday October 5 2000
Virgin Net is expected to complete its divorce from NTL, owner of 49% of Virgin Net, by the end of next week, a move that will take Virgin out of the ISP market.
NTL is understood to be paying around £100m, of which 10% will be in cash and the remainder in NTL common stock.
The deal will leave Virgin in sole control of the Virgin Net content and commerce business, while NTL will take on all the dial-up ISP subscribers, of which there are believed to be around 500,000. Overnight NTL will become one of the leading ISPs in the UK - NTL reckons the Virgin Net subscribers will take its ISP user tally to 1m, which would thrust it into third place in the UK ISP stakes.
After the two have gone their separate ways, Virgin Net will exist only as an entertainment portal, although it's likely to take the best part of a year before the consumer branding is changed and Virgin Net subscribers are fully migrated into NTL's ISP. Sources have suggested that the imminent parting of ways was the reason why Virgin Net has recently put its plans for unmetered access on hold, and that this plan will simply be rolled into NTL's unmetered package, NTLWorld.
NTL and Virgin Net announced their proposed separation at the start of August, almost a year after the development was first internally mooted at Virgin Net. The two parties have worked together on Virgin Net since the end of 1996 when it was agreed that NTL would provide the backbone and Virgin would develop the front-end, the content and handle all the marketing for the ISP. However, rumours started speculating about a year ago that Virgin Net was not happy with the quality of the service provided by NTL. Reports in the press at the time suggested a spat over plans to float Virgin Net, which was being pushed by NTL, and talked about a strained relationship and dual-sourcing (using two different backbone providers) using Cable & Wireless' network.
Since then the Virgin Group has developed a more integrated new media strategy and set up a separate business, Virgin.com, which acts as a portal for the whole group. The remnants of Virgin Net will be tied much tighter into Virgin.com. However inside sources have suggested that the Virgin Group has given the Virgin Net portal six months to prove it can stand on its own two feet before it reassesses its role.
