Virgin Mobile USA, Richard Branson’s US MVNO, is gearing up for a $506m IPO, according to a statement filed with the Securities and Exchange Commission late Friday.

The IPO is being led by Lehman Brothers, with Merrill Lynch & Co. and Bank of America Securities acting as joint book running managers.

The MVNO leases its network capacity off local carrier Sprint Nextel and said the proceeds from the offer will be used to pay off existing debt as well as an undisclosed amount to Sprint. In its filing, the company said that as of March 31 its total debt was $531.3m and following this offering, on a pro forma basis, total debt would have been $341.3m.

The move is also thought to have been partially triggered by the need for Sprint, which owns about 50 per cent of the business, to put a valuation on its holding.

Virgin’s subscriber base reached 4.88 million at the end of March, up from 4.57 million at the end of December.