Virgin Mobile had earlier denied press speculation that it was valued too high

Richard Branson's Virgin Mobile had hoped to see itself valued at between �588m and �713m, selling shares for between 235p and 285p.

But now the company has downgraded its expectations and has valued the firm at between �500m and �550m, with shares trading at between 200p to 220p.

The announcement follows concerns from investors that the firm was overvalued.

'Incredibly tough'

Launched in 1999, Virgin Mobile is the UK's fifth largest mobile phone service with 4.1 million customers.

As a low-cost, no-frills provider Virgin Mobile has built its business on the back of a strong brand and youth-oriented advertising.

But early hopes of an equity valuation of about �1bn pounds have almost halved since it announced flotation plans on 30 June.

"The price range is now more realistic," said one fund manager.

The size of the stake to be listed has also fallen to 25% from between 37% and 43%.

"The crunch has come around the market conditions. The market is incredibly tough for IPOs," a company spokesman said.

Virgin Mobile is not alone - the European market has seen a plethora of IPO plans derailed, float prices cut and new listings trade below issue prices.

The mobile phone network is the second IPO hopeful to cut its listing valuation on Monday.

Premier Foods, the maker of Branston Pickle and Ambrosia custard, was also forced to trim its valuation hopes.

Virgin Mobile is due to float on Wednesday, 21 July.