A sale of the division, which hooks up small businesses to the internet and also holds a number of local-authority contracts, could raise £600m for Virgin. However, combining it with another telecoms supplier, rather than a straight disposal, is the most likely exit.

The investment bank Goldman Sachs formulated a proposal to combine Virgin’s operation with Thus, which is now being bought for £329m by Cable & Wireless. The plan discussed with Thus would have injected private-equity money into the enlarged group. A reseller agreement, so traffic would still be carried on Virgin’s network, was also prepared.

Virgin’s business division had sales of £642m last year, though it has warned this will fall. Bankers estimate it makes a profit of £100m.