Major mobile provider lost nearly 400,000 customers thanks to price hikes

The company announced a further monthly increase of £2.50 for its 15.6 million mobile customers

Virgin Media O2 has issued a warning regarding anticipated declines in sales and earnings for 2026, following significant customer attrition attributed to recent price increases.

The telecoms giant reported a net loss of 397,500 mobile subscribers last year, with a substantial 164,800 departing in the final quarter, primarily due to O2’s price adjustments.

Last October, the company announced a further monthly increase of £2.50 for its 15.6 million mobile customers, effective from spring 2026, revising an earlier proposed rise of £1.80.

Concurrently, Virgin Media O2 saw 138,400 broadband customers leave in 2025, including 16,700 in the last three months of the year.

The company’s annual results indicated a 0.4 per cent decline in underlying earnings for the year, reaching £3.9bn, following a more pronounced 2.4 per cent drop during the final three months.

The news follows O2 unexpectedly announcing it was raising prices by £2.50 a month for existing customers (PA)

When adjusted to exclude its recent transaction with business-to-business provider Daisy, the group reported a 0.9 per cent increase in earnings over the full year, though they still saw a 1.3 per cent decrease in the last quarter.

Looking ahead, Virgin Media O2 issued a caution regarding potentially steeper financial declines in the coming year, anticipating a continuation of what it described as “challenging market conditions”.

It is guiding towards a drop in underlying earnings of 3 per cent to 5 per cent, stripping out its takeover of Daisy, while underlying total service revenues are also expected to drop by 3 per cent to 5 per cent.

Virgin Media O2 and Daisy Group last year merged their business communications and IT operations to create a telecoms company with sales of about £1.4bn a year, called O2 Daisy.

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Virgin Media O2 said the lower sales outlook “reflects heightened promotional intensity and ongoing uncertainty in the consumer fixed market, alongside the planned streamlining of the business-to-business product portfolio”.

Virgin Media O2 reported a net loss of 397,500 mobile subscribers last year, with a substantial 164,800 departing in the final quarter, primarily due to O2’s price adjustments (PA)

It will look to make cost savings to offset the impact.

Lutz Schuler, chief executive of Virgin Media O2, said: “While we expect challenging market conditions to continue in 2026, we are well positioned to seize the right opportunities in each of our business areas – consumer, business-to-business and wholesale – and the foundations we’re putting in place today will help to build long-term customer trust and fuel future profitability and cash generation.”

Virgin Media O2 was formed in 2021 after the £31bn mega merger between Virgin Media, owned by Liberty Global, and O2, the network owned by Spanish rival Telefonica.

On Wednesday, Liberty Global, Telefonica and private equity firm InfraVia joined forces to buy British alternative fibre firm Substantial Group for £2bn.

The groups said the joint venture deal will strengthen its position competing against BT’s Openreach, the UK’s biggest fibre broadband firm and network operator.

Looking ahead, Virgin Media O2 issued a caution regarding potentially steeper financial declines in the coming year, anticipating a continuation of what it described as ‘challenging market conditions’ (PA Wire)

Substantial, which runs fibre network Netomnia, is expected to have more than 3.4 million fibre premises and over 500,000 customers by the completion of the deal, the firms said.

Nexfibre – Liberty Global, Telefonica and InfraVia’s joint venture business – will take over Substantial in a deal which is set to expand it cover to eight million premises across the UK by the end of 2027.

However, rivals have already raised potential competition concerns over the move.

Simon Holden, chief executive officer of CityFibre, said: “There is an 80 per cent overlap between these two players and, if the deal goes ahead, it would significantly reduce competition and the choice available to consumers, as well as force hundreds of thousands of Netomnia customers back to Virgin Media O2.

“Given the scale of this overlap, the CMA must thoroughly examine the deal.

“Competition has driven lower prices, faster speeds and better services – and this deal risks re-establishing an ineffective duopoly of BT and VMO2 and undermining the significant progress the UK has made.”