The board of directors at Virgin Mobile has rejected the takeover bid by cable operator NTL, stating that the £817m offer "materially undervalues Virgin Mobile".
NTL launched a bid on Monday for the mobile telephone provider, and is now considering raising its offer to £834m.
Virgin Mobile is 72 per cent owned by Sir Richard Branson's Virgin Group. The acquisition would provide the group with a 12-15 per cent stake in NTL.
Branson has said that he supports the proposal, but Gordon McCallum, the board member representing Virgin Group, abstained from voting.
The bid for Virgin Mobile would allow NTL to offer a so-called 'quadruple play' of cable television, broadband, land-line telephony and mobile telephony. A quadruple play is believed to offer NTL better cross-selling opportunities.
Analyst firm Gartner suggested that NTL could become more aggressive as a content provider if the acquisition goes through.
"Virgin/NTL could even bid against other service providers for sports and other broadcasting rights," principal research analyst Susan Richardson and research vice president Adam Daum wrote in an analysis.
Do you agree?
Have your say on this article