Virgin Mobile USA, Best Buy & Carphone Warehouse

One of the more interesting facts to come out of last nights IPO filing for Virgin Mobile USA is the extent of the Best Buy shareholding in the company: pre-IPO 4.82% and post-IPO 2.78% (assuming underwriting option not exercised). Best Buy is one of the key sales distribution outlets for Virgin Mobile USA.

Best Buy also recently purchased a near 3% shareholding in the UK’s Carphone Warehouse for US$183m. Best Buy has a joint venture with Carphone to launch mobile stores in the USA and another for Carphone to bring the Geek Squad to Europe.

Carphone as well as being a key distribution outlet for Virgin Mobile in the UK, also has a joint venture for the Virgin Mobile MVNO in France.

Obviously, the connections between the three groups: Virgin Group, Best Buy and Carphone Warehouse run deep and Best Buy is interested in a lot more than just mobile phone retailing in the USA.

It will be interesting to see how this plays out and of course sounds an alarm bell for all Carphone bears. Personally, I think Best Buy will take a look at the mobile and fixed telco services and realise that the grass is not greener on the other side of the fence.

I still think Carphone is overvalued.