Branson to continue to back Virgin Mobile

LAS VEGAS (Reuters) - Virgin Group VA.UL head Richard Branson said on Tuesday he will continue to back Virgin Mobile USA Inc VM.N even as it endures tough times amid a U.S. recession that could last 12 months.

Virgin Mobile USA, which went public in October, warned last month its revenue would not grow this year and issued disappointing customer growth targets, under pressure from new competitive thrusts from bigger rivals such as Verizon Wireless and AT&T Inc (T.N).

Branson said Virgin Group, now a 35 percent owner of the U.S. mobile service, sees the phone company's difficulties as a near-term issue as consumers tighten their belts.

"There are cycles," he told Reuters in an interview ahead of his keynote speech at the CTIA annual wireless show. "I don't think the consumer downturn in America will be more than 12 months. It's likely to be 12 months."

Virgin Mobile USA offers prepaid mobile services to young people who pay for calls in advance rather than via monthly bills. Sprint Nextel Corp (S.N), the No. 3 U.S. mobile service, has a roughly 11 percent stake in Virgin Mobile USA and rents it space on its network.

Dan Schulman, Chief Executive of Virgin Mobile USA said the company would compete against bigger rivals by keeping a sharp focus on the services of its customers, aged between 15 and 34 years old, and on keeping its pricing plans up to date.

"The rock in our slingshot against these goliaths is focus. We're just a prepaid provider," he said in an interview at the sidelines of the show, noting that bigger rivals like AT&T were going after multiple customer segments at once.

While rivals talk a lot about services such as mobile video and music downloads, Schulman said that the hype around such services is "overblown."

Instead he sees messaging and links to social network sites as being important and eventually wants to tie these to services such as automatically locating a friend, using Global Positioning System location technology.

"Messaging is gigantic in all its forms whether it be instant messaging, text messaging or e-mailing," he said. "Tying that in to social networks with location based services are going to be the big thing that occur in the next year or two."

Schulman said that the company's goal was to either grow or keep its share of the U.S. prepaid-market, as it grows from an estimated 30 million customers to about 50 million in 2010.

"There'll be some years we may not achieve that. Other years we'll beat it," he said.

Virgin Mobile USA, which was priced at $15 in its initial public offering, has seen its shares fall to trade at $2.05 on Tuesday afternoon on the New York Stock Exchange.

(Reporting by Sinead Carew, editing by Gerald E. McCormick/Elizabeth Fullerton)