Branson phone deal to unlock £1.5bn

SIR Richard Branson is poised to take full control of his Virgin Mobile phone venture as part of a peace treaty with German partner T-Mobile.

A deal will leave the tycoon free to float or sell the company for an expected £1.5bn.

Virgin Mobile is a joint venture between Branson and T-Mobile, which is backed by Deutsche Telekom. The partners fell out dramatically last year over revenue sharing agreements and the case ended up in the High Court, where the Germans lost.

Legal action continues, but City sources say that a deal simplifying the relationship between the two parties could be signed by the end of the year.

A source close to the talks said: 'The terms are likely to mean that T-Mobile will give up its equity in return for a share of profits and a new customer services deal.'

One of the main causes of the legal battle was a monthly payment by T-Mobile of more than £3 for each Virgin Mobile customer. Virgin Mobile continues to count people as customers long after they have stopped using their phones - and insists on receiving the cash.

But a rapprochement of sorts has come about since Brian McBride, a former Dell computer executive, replaced Harris Jones as T-Mobile's chief executive in Britain.

A source close to Virgin said: 'He is a breath of fresh air - there has been a wind of change since McBride's appointment. He comes without baggage and he has been very diplomatic. The atmosphere has become much warmer since he arrived.'

Branson's mobile venture has been highly successful, attracting three million customers since it was started four years ago.

If a settlement is reached, he will be free to raise money from Virgin Mobile. He has hinted at plans for a flotation, but Branson-watchers believe he is more likely to sell a stake to a trade buyer such as struggling newcomer Three, owned by Hong Kong's Hutchison Whampoa, or simply use the value unlocked to borrow money on the capital markets.