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Telecoms group Virgin Media O2 has warned over falling sales and earnings in 2026 as it revealed hefty mobile customer losses after hiking prices.

The group said it lost 397,500 mobile customers on a net basis last year, with a 164,800 plunge in the fourth quarter largely due to O2 price hikes.

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

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

Annual results showed underlying earnings fell 0.4% over the year to £3.9 billion after a 2.4% drop in the final quarter.

With the recent deal with business-to-business provider Daisy stripped out, it said earnings rose 0.9% over the year and fell 1.3% over the last three months.

Virgin Media O2 cautioned over steeper declines in the year ahead as “challenging market conditions” are set to continue.

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

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

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”.

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 £31 billion 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 £2 billion.

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.

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 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% 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.”