THE move by NTL to buy Virgin Mobile marks a new era for the cable group and represents the greatest initiative it has shown since it was created in the UK in the mid-1990s.

The last four years have not been easy for NTL, saddled with a reputation for poor customer service, crippled by debt, forced into Chapter 11 bankruptcy protection and taking months to put together what had appeared to be a straightforward takeover of smaller rival Telewest.

Under Barclay Knapp, the Labrador-born co-founder of NTL, the cable group expanded rapidly, built up a debt pile of $17 billion (£9.75 billion) and was on the brink of going bust.

Two years later, should talks between Simon Duffy, the chief executive of NTL, and Tom Alexander, his opposite number at Virgin Mobile, prove to be successful, the deal would fulfil a dream first envisioned by Mr Knapp. That vision was to sell a bundled service to customers so that they could get cable, broadband, mobile and landline from one company. Going to one company for all four services would, in theory, lead to substantial discounts for subscribers.

One of Mr Knapp’s early ambitions had been to bid for a third-generation mobile licence in 2000 in conjunction with France Télécom. The bid failed at the last hurdle.

A successful tie-up between Virgin and NTL would fulfil another of Mr Knapp’s ambitions — that of making cable a powerful third force to challenge BT and BSkyB.

While Virgin and NTL would be the first to offer the four-service bundled package, BT and Sky are unlikely to be far behind.

Next year, BT is planning to launch its own basic TV service based on Freeview plus video on demand. The phone giant can already supply landline services, broadband and mobile.

Sky, meanwhile, after completing its acquisition of Easynet, will launch its own landline and broadband service from next year. Industry rumours are also circulating that it is holding discussions about launching a mobile virtual operator.

So after NTL’s disastrous expansion plans of the late 1990s, can it afford to buy Virgin Mobile, before even completing the purchase of Telewest? City analysts think so.

Duffy has structured the deal so that Sir Richard Branson, who holds three quarters of the Virgin Mobile stock, will accept NTL shares, leaving only the remaining quarter to be paid in cash. Equally, NTL’s debt pile is now a more modest $5.5 billion since its restructuring after Chapter 11.

Should the deal go through, it is expected to encounter no friction from the regulator, Ofcom’s chief executive Stephen Carter.

Mr Carter knows NTL better than most, having been UK chief executive before taking up the Ofcom post. However, it is not yet clear whether he would be involved in any decision to approve the deal, which would rest principally with the Office of Fair Trading.

It is expected, however, that BT and Sky will both argue that regulations they are under in their historic markets should either also apply to NTL or be dropped. For example, BT is required to unbundle its network, while NTL is not.

A spokesman at Ovum, the telecoms consultancy, added that the deal, if it comes off, represents an exceptional opportunity for Sir Richard to extend his Virgin brand into the heart of the UK’s television and entertainment market.

“The Virgin brand will have a lot more customer appeal than the NTL or Telewest brands, both of which have suffered from customer-service problems,” he said.