Ovum: Dramatic merger proposed by NTL and Virgin Mobile

Maybe I caught this late or they are just late providing commentary, but Julian Hewett at Ovum posts his analyis of the deal being discussed between Virgin Mobile and NTL to create the UK's first quad-play offering.

Hewett opines that the "deal, if it comes off, represents an exceptional opportunity for Richard Branson to extend his Virgin brand into the heart of the UK's television and entertainment market. At the same time, the Virgin brand will have a lot more customer appeal than the NTL or Telewest brands, both of which have suffered from customer service problems. However, Virgin Mobile mostly has low-spending pre-pay customers, which are not well suited to conversion to a quad-play contract."

Hewett notes NTL is already in the midst of a merger with Telewest to "create a single unified cable operator in the UK," and "is struggling to improve its digital TV offering, raising broadband speeds and pushing into the business market." Throw in Virgin Mobile and he warns NTL better not lose focus because "remember what happened to AOL and Time Warner."

Hewett points the bigger challenge delivering a quad-play is "to generate value from actual convergence between the services. TV and video on mobiles has yet to be proven in the market." He concludes that

if this deal goes through it will define the shape of the UK consumer telecoms/entertainment landscape for the next decade: BSkyB versus Virgin versus BT, with the global Internet portals (Google, Yahoo! et al) as wild cards.