The telecoms group lost 397,500 mobile customers in 2025 and forecasts underlying earnings will fall 3-5% in 2026

Telecommunications giant Virgin Media O2 has issued a warning over declining sales and earnings in 2026 as it revealed substantial mobile customer losses following price increases.

The company said it shed 397,500 mobile customers on a net basis last year, with a 164,800 drop in the fourth quarter driven largely by O2 price rises.

Last October, Virgin Media O2 announced it would increase prices for its 15.6 million mobile customers by £2.50 a month from spring 2026, having previously indicated the rise would be £1.80.

The business also said it lost 138,400 broadband customers on a net basis in 2025 after losing another 16,700 in the final three months.

Annual results showed underlying earnings declined 0.4% over the year to £3.9 billion following a 2.4% fall in the final quarter.

With the recent deal with business-to-business provider Daisy excluded, it said earnings grew 0.9% over the year and dropped 1.3% over the last three months.

Virgin Media O2 warned of sharper declines in the year ahead as “challenging market conditions” are set to persist.

It is forecasting a fall in underlying earnings of 3% to 5%, excluding its acquisition of Daisy, whilst underlying total service revenues are also expected to decline by 3% to 5%.

Virgin Media O2 and Lancashire-based Daisy Group last year merged their business communications and IT operations to form a telecommunications company with sales of approximately £1.4 billion a year, called O2 Daisy. Virgin Media O2 has attributed the reduced sales forecast to “reflects heightened promotional intensity and ongoing uncertainty in the consumer fixed market, alongside the planned streamlining of the business-to-business product portfolio”.

The company plans to implement cost savings to counterbalance the effects.

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.”

Virgin Media O2 was established in 2021 following the £31 billion mega merger between Virgin Media, owned by Liberty Global, and O2, the network owned by Spanish competitor Telefonica.

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 the 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, according to the companies.

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.

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.”