Merger talks were instigated by NTL chief executive Simon Duffy nine months ago, and have now reached the stage where Virgin Mobile has revealed to the stock market that it has received an approach from NTL.
The offer is understood to be worth 323p a share to Virgin shareholders, valuing Virgin Mobile at around £817m. Branson would become the single largest shareholder in the new enlarged cable, phone and mobile company, which is likely to be valued at £4.5bn, by swapping his Virgin Mobile shareholding for a stake of around 14%, while Duffy would remain chief executive.
Around 28% of Virgin Mobile is publicly traded and the rest is owned by Branson, the force behind the Virgin brand, which encompasses air travel, holidays, credit cards and music among others.
NTL would turn into a Virgin-branded business and benefit from its marketing nous, while it is believed that Branson wishes to acquire Premiership football rights for the 2007 season onwards, when they are auctioned next year.
In addition, the combination of NTL's "triple-play" TV, broadband and telephony offering with mobile would produce the UK's only "quadruple-play" provider. It will be able to offer customers a single bill for whatever services they opt for.
However, one risk to the merger is NTL's ongoing integration of cable company Telewest. The NTL/Virgin deal is subject to the completion of the NTL/Telewest merger, which was announced at the beginning of October.
NTL and Telewest combined has 5m customers of whom 3.3m subscribe to pay TV. Virgin Mobile also has more than 5m customers, to which it offers pre-pay and monthly contract calls.
The new company will be able to pose a bigger challenge to Sky, which is itself scrambling to develop its broadband and fixed-line capability, but only just more than half of UK households can be reached with NTL/Telewest's cable network.
The move could accelerate the migration of TV content on to mobile phones by twinning a TV platform operator with a mobile network, albeit one that is a "virtual network" via a carriage agreement with T-Mobile.
Virgin Mobile has been running a trial of mobile TV services in a joint venture with BT's Livetime division.
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