July 20 (Bloomberg) -- Virgin Mobile USA Inc., a joint venture of billionaire Richard Branson's Virgin Group Ltd. and Sprint Nextel Corp., raised its planned initial public offering to $506 million, five times more than the original target.

The mobile-phone company said in May it planned to raise $100 million in the IPO. Warren, New Jersey-based Virgin Mobile USA didn't disclose how many shares it plans to sell and the offer price in its regulatory filing today. Spokeswoman Jayne Wallace declined to comment.

Virgin Mobile USA is luring younger consumers to gain a larger share of the U.S. prepaid subscriber market, which may almost double by 2011. The company is also taking advantage of investor appetite for technology and telecommunications debuts, which have raised 48 percent more this year than in the same period last year, according to Bloomberg data.

``The youth market is under-penetrated, and prepaid is one tool for targeting that,'' said Christopher Watts, an analyst at Atlantic Equities LLP in London. ``Virgin Mobile has a successful brand that connects in the youth market quite well.''

Virgin Mobile USA, formed in 2002, targets a market that is defined as customers under the age of 35, according to the filing. The company has partnered with Yahoo! Inc. and Viacom Inc.'s MTV to provide entertainment news, ring tones, games and instant messaging on colorful handsets named Cyclops, Snapper, Shorty and Marbl.

Reducing Debt

The money raised in the IPO will be used to cut debt and pay money owed to Sprint, the third-largest U.S. wireless company.

The company had 4.88 million customers on March 31. First- quarter net income jumped to $15.4 million from $3.38 million a year earlier, and sales rose 21 percent to $339.3 million.

Virgin Mobile USA sells its prepaid phone cards, called Top- Up cards, through 130,000 retailers, according to the filing. More than 35,000 stores distribute its handsets, including Wal- Mart Stores Inc., the world's largest retailer.

The number of U.S. mobile customers with a prepaid contract may almost double to 53 million by 2011, the company said, citing an estimate by researcher Yankee Group.

Virgin Mobile USA shares will be sold ``as soon as practicable'' on the New York Stock Exchange under the ticker ``VM,'' the company said.

Lehman Brothers Holdings Inc., Merrill Lynch & Co. and Bear, Stearns & Co. Inc. are managing the share sale.

To contact the reporters on this story: Ville Heiskanen in New York at vheiskanen@bloomberg.net.

Last Updated: July 20, 2007 10:40 EDT