Virgin still trying for China mobile deal: Branson

SHANGHAI (Reuters) - A year after announcing he aimed to set up a mobile reselling service in China, Richard Branson said on Monday his Virgin Group was still trying to get a slice of the world's biggest cellular market.

Branson said last December his company was in talks with a Chinese telecom operator with an eye to investing up to US$300 million to launch a joint venture in the market.

He declined to name potential partners, though one publication said the field may include China Telecom Corp Ltd, the nation's largest fixed-line carrier, and China Unicom Ltd, its number-two mobile carrier.

Virgin's mobile arm, Virgin Mobile Holdings (UK) Plc, has similar deals in other markets such as the United States and Australia, forming alliances with existing carriers and then reselling service under the Virgin Mobile name.

Since his original disclosure, Branson and Virgin have kept a silence on the subject of a China venture.

Branson said his company is still interested in China, though any venture would not be able to take the form of a traditional mobile virtual network operator, or MVNO, which are prohibited under Chinese law.

"If we did something it would have to be a different kind of deal. We want to make sure that if we do something we do it right," he said at an event in Shanghai. "These things take time. I'm hopeful we will be able to do something here over the next year or two."

China is the world's largest mobile market, with 383 million subscribers divided between Unicom and industry leader China Mobile (Hong Kong) Ltd.

But one or both of the nation's two fixed-line carriers, China Telecom and China Netcom Group Corp (Hong Kong) Ltd, is also expected to enter the business when Beijing awards third-generation (3G) mobile licences, a development industry watchers expect in the first half of next year.

Separately, Branson said his group wants to open a first China outlet of its music retailing Virgin Megastore, despite the broader problem of rampant piracy.

"We're looking at sites in Shanghai," he said. "Despite the piracy, we think there's a lot of people who would welcome a Virgin Megastore here."

Virgin Megastores already operate in Britain, France, Japan and the United States.

Branson also said Virgin Atlantic Airways, which next month will start offering daily non-stop flights between London and Shanghai, would like to offer a Beijing/London service as well, though this would not begin until next November at the earliest.