Soaring Virgin facing BT challenge

VIRGIN Mobile has again proved it is the fastest-growing mobile phone company in Britain but said it could face a strong challenge from BT's re-entry into the market.

Sir Richard Branson's virtual network is a joint venture with Deutsche Telekom's T-Mobile - which is expected to run an almost identical network for BT when it launches its service shortly.

A Virgin spokesman said: 'The fact that BT and Tesco, two of Britain's other greatest brands, are copying Virgin Mobile is, obviously, potentially a threat to us. But it also proves that our model and what we have done in the mass market really works.'

Virgin Mobile gained 232,000 new customers in the three months to the end of June, taking its total customer base up to 2.87m and putting its target of 3.1m at the year-end well within reach.

Revenues rose to £102m from £94.5m in the first quarter and £65.8m a year ago.

Earnings before interest, tax, depreciation and amortisation in the first six months were £42m, compared with £16m in the whole of 2002.

Branson said: 'As the UK market has stopped growing, our ongoing dramatic growth reflects Virgin Mobile's attractiveness to switchers keen to leave other networks for a better, fairer deal. In particular our new 3p text tariff is proving to be really popular.'

Recent management changes at T-Mobile have seen an improvement in its relationship with Virgin after an acrimonious court case earlier this year.

Oftel has ordered BT to cut the wholesale prices it charges for unlimited internet access by 17%, backdated to June last year. Analysts said this would cost BT £20m in back payments and about £17m a year in future. The regulator's move was widely expected as BT's network has become more robust and so requires fewer checks to prevent overloading.