Virgin Media O2 Issues Profit Warning for 2026 Following Steep Customer Losses
Telecommunications giant Virgin Media O2 has issued a stark warning about declining sales and earnings for 2026, revealing substantial mobile customer losses after implementing price increases. The company disclosed it lost a net total of 397,500 mobile customers throughout 2025, with a significant drop of 164,800 in the final quarter alone, primarily attributed to O2 price hikes.
Broadband Customer Decline and Financial Performance
The telecoms group also reported losing 138,400 broadband customers on a net basis in 2025, including an additional 16,700 in the last three months of the year. Annual results showed underlying earnings decreased by 0.4% over the year to £3.9 billion, following a 2.4% decline in the final quarter. When excluding the recent deal with business-to-business provider Daisy, earnings actually rose 0.9% annually but fell 1.3% in the last quarter.
Price Increases and Customer Impact
Last October, Virgin Media O2 announced it would increase prices for its 15.6 million mobile customers by £2.50 per month starting spring 2026, revising the previously announced increase of £1.80. This substantial price adjustment appears to have contributed significantly to the customer exodus, particularly in the latter part of 2025.
Future Outlook and Cost-Saving Measures
Virgin Media O2 has cautioned about steeper declines in the coming year as "challenging market conditions" are expected to persist. The company is guiding toward a 3% to 5% drop in underlying earnings, excluding its Daisy takeover, while underlying total service revenues are also projected to decline by 3% to 5%. The lower sales outlook reflects heightened promotional intensity, ongoing uncertainty in the consumer fixed market, and planned streamlining of the business-to-business product portfolio.
To offset these impacts, Virgin Media O2 will implement cost-saving measures, including cutting approximately 2,000 jobs. Chief Executive Lutz Schuler commented: "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."
Corporate Background and Recent Developments
Virgin Media O2 was established in 2021 following a £31 billion mega-merger between Virgin Media, owned by Liberty Global, and O2, the network owned by Spanish rival Telefonica. In a separate development, Liberty Global, Telefonica, and private equity firm InfraVia recently 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 between Liberty Global, Telefonica, and InfraVia – will take over Substantial, expanding coverage to eight million premises across the UK by the end of 2027.
Competition Concerns Raised
However, industry rivals have already expressed potential competition concerns regarding this acquisition. Simon Holden, Chief Executive Officer of CityFibre, stated: "There is an 80% 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."
Holden emphasized: "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."
The telecoms group's merger with Daisy Group last year combined their business communications and IT operations to create O2 Daisy, a telecoms company with annual sales of approximately £1.4 billion. As Virgin Media O2 navigates these challenging market conditions, the company faces the dual challenge of retaining customers while implementing necessary cost-saving measures to maintain profitability in an increasingly competitive telecommunications landscape.
