Virgin Media O2 Issues Warning Over Falling Earnings and Customer Losses
Telecommunications provider Virgin Media O2 has issued a stark warning regarding declining sales and earnings for 2026, following significant mobile customer losses attributed to recent price increases. The company disclosed that it shed 397,500 mobile customers on a net basis throughout 2025, with a notable drop of 164,800 in the fourth quarter primarily driven by O2 price adjustments.
Price Rises and Broadband Customer Decline
In October 2025, Virgin Media O2 announced it would increase prices for its 15.6 million mobile customers by £2.50 per month starting in spring 2026, up from an initially indicated rise of £1.80. This move has contributed to the customer exodus. Additionally, the business reported a net loss of 138,400 broadband customers in 2025, including another 16,700 in the final quarter.
Financial Performance and Forecast
Annual results showed underlying earnings declined by 0.4% over the year to £3.9 billion, following a 2.4% fall in the final quarter. Excluding the recent deal with business-to-business provider Daisy, earnings grew 0.9% annually but dropped 1.3% in the last three months. Looking ahead, Virgin Media O2 forecasts a sharper decline in underlying earnings of 3% to 5% for 2026, excluding the Daisy acquisition, with underlying total service revenues also expected to fall by 3% to 5%.
The company attributes the reduced sales forecast to heightened promotional intensity, ongoing uncertainty in the consumer fixed market, and planned streamlining of the business-to-business product portfolio. To counterbalance these effects, Virgin Media O2 plans to implement cost-saving measures.
Leadership Perspective and Market Conditions
Lutz Schuler, CEO of Virgin Media O2, stated: "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."
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 competitor Telefonica. In a related development, on Wednesday, Liberty Global, Telefonica, and private equity firm InfraVia collaborated to purchase British alternative fibre company Substantial Group for £2 billion.
The consortium stated that this joint venture deal will bolster its position in competition against BT's Openreach, the UK's largest fibre broadband company and network operator. Substantial, which operates fibre network Netomnia, is projected to have over 3.4 million fibre premises and more than 500,000 customers by the time the deal concludes.
Competition Concerns
Nexfibre – the joint venture between Liberty Global, Telefonica, and InfraVia – is acquiring Substantial in a transaction designed to extend its footprint to eight million properties nationwide by the close of 2027. However, competitors have already flagged possible competition issues surrounding the transaction.
Simon Holden, chief executive of CityFibre, commented: "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."
He added: "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."
