The UK companies say they are in talks to set up an MVNO (Mobile Virtual Network Operator), the same as Virgin’s services in Britain and utilising Carphone’s stores in France. The joint venture could be up and running as early as next year. The proposed system would operate under the Virgin Mobile brand and use the mobile network of French company Orange to carry its calls. This relationship between Virgin and Carphone would also bring together two of Britain’s best known entrepreneurs, Carphone chief executive Charles Dunstone and Sir Richard Branson.

France is reluctantly opening up to virtual operators, or MVNOs. The country’s mobile sector is dominated by just three operators traditionally keen to protect their market share; Bouygues Telecom – Vivendi’s SFR and France Telecom’s Orange. Pressure from regulators, and the threat of legal action, has seen the big reluctantly allow other firms to offer services by piggy-backing onto their established networks.

This Virgin and Carphone venture could enable both companies to capture a slice of France’s mobile market which currently trails other European countries. The mobile penetration rate in France currently stands at about 75%, compared with a Western European average of 97%. Carphone, through its Phone House stores, is one of France’s leading independent High Street mobile phone retailers while Virgin brings its experience of running mobile services in the UK and the US. Virgin Megastores in France would also be used to promote the new mobile service.