Virgin Media O2 Reports Significant Customer Exodus Following Price Increases
Virgin Media O2 has issued a stark warning regarding projected declines in sales and earnings for 2026, following a substantial loss of customers attributed to recent price adjustments. The telecommunications giant revealed a net loss of 397,500 mobile subscribers throughout 2025, with a notable 164,800 customers departing in the final quarter alone, directly linked to O2's pricing strategy.
Price Hikes Drive Customer Attrition
In October 2025, the company announced an additional monthly increase of £2.50 for its 15.6 million mobile customers, effective from spring 2026. This revised an earlier proposed rise of £1.80, marking a significant escalation in costs for consumers. The price adjustments have not only impacted mobile services but also broadband, with Virgin Media O2 losing 138,400 broadband customers in 2025, including 16,700 in the last three months of the year.
The financial repercussions are becoming increasingly evident. The company's annual results showed a 0.4 per cent decline in underlying earnings for the year, totalling £3.9 billion. This followed a more pronounced 2.4 per cent drop during the final quarter. When adjusted to exclude its recent transaction with business-to-business provider Daisy, the group reported a modest 0.9 per cent increase in earnings over the full year, though they still experienced a 1.3 per cent decrease in the last quarter.
Challenging Market Conditions Ahead
Looking forward, Virgin Media O2 has cautioned that steeper financial declines may be on the horizon for the coming year. The company anticipates a continuation of what it describes as "challenging market conditions," guiding towards a drop in underlying earnings of 3 per cent to 5 per cent, excluding its takeover of Daisy. Underlying total service revenues are also expected to decline by 3 per cent to 5 per cent.
Lutz Schuler, chief executive of Virgin Media O2, commented on the situation, stating: "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."
The company plans to implement cost-saving measures to offset the impact of these declines. Virgin Media O2 attributed the lower sales outlook to heightened promotional intensity, ongoing uncertainty in the consumer fixed market, and the planned streamlining of the business-to-business product portfolio.
Strategic Moves and Industry Reactions
Virgin Media O2, formed in 2021 through the £31 billion merger between Virgin Media and O2, has been actively expanding its operations. Last year, the company merged its business communications and IT operations with Daisy Group to create O2 Daisy, a telecoms entity with annual sales of approximately £1.4 billion.
In a separate development, Liberty Global, Telefonica, and private equity firm InfraVia joined forces to acquire British alternative fibre firm Substantial Group for £2 billion. This joint venture deal aims to strengthen their position against BT's Openreach, the UK's largest fibre broadband firm and network operator.
Substantial, which operates the fibre network Netomnia, is expected to have more than 3.4 million fibre premises and over 500,000 customers upon completion of the deal. Nexfibre – the joint venture business – will take over Substantial, expanding its coverage to eight million premises across the UK by the end of 2027.
However, this move has raised concerns among competitors. Simon Holden, chief executive officer of CityFibre, voiced potential competition issues, stating: "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."
Holden emphasised that competition has historically driven lower prices, faster speeds, and better services, warning that this deal risks re-establishing an ineffective duopoly of BT and Virgin Media O2, potentially undermining the progress made in the UK telecoms sector.
