Sprint PCS, Virgin Group form joint cellular venture

Virgin Group Ltd. in London will market cellular phone service in the U.S. on the Sprint PCS Group network under its Virgin Mobile brand, a strategy it has used in the U.K., where it also resells service on the networks of other carriers.

Kansas City, Mo.-based Sprint PCS and Virgin Mobile will each contribute $50 million to the new joint venture, Virgin Mobile USA, which will market prepaid cellular service to 15- to 30-year-olds. Sir Richard Branson, Virgin Group chairman, said in a statement that the joint venture "will leverage our strong brand recognition as well as our consumer-savvy marketing machine to satisfy the needs of a US. market that demands customization.'' Virgin Group is a conglomerate that operates such businesses as Virgin Atlantic Airways Ltd., record stores and a train service in the U.K.

Charles Levine, president of Sprint PCS, said in a statement that the deal "will add users to our network and effectively capture an even larger portion of the relatively untapped market of young wireless users."

Craig Mathias, an analyst at Farpoint Group in Ashland, Mass., called Virgin a "marketing machine'' that will bring in additional revenue to Sprint by focusing on untapped segments of users. Virgin Group started work on its U.S. entry more than a year ago.

Last September, John Tantum, president of Virgin Mobile USA, said the company could generate billions of dollars in revenue from the U.S. cellular service market.

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