First-quarter revenues fall but VMO2 sees brighter prospects for fiscal year

In a set of results whereby revenues falling on a yearly basis were offset by a third consecutive quarter of improved momentum in customer net additions, Virgin Media O2 (VMO2) has announced a mixed set of results in its first quarter of the 2026 financial year.

According to VMO2 CEO Lutz Schüler, 2026 is all about the leading UK communications operator navigating a turbulent market landscape while investing, where the conditions are right, to maximise opportunities, “future-proof” its networks and “lay the foundations to build long-term customer trust, profitability and cash generation”.

The CEO regarded the firm’s performance for the three-month period ended 31 March 2026 as in line with its full-year guidance. Total service revenue for the quarter was £2.08bn representing a 3.0% year-on-year (YoY) decrease, adjusted for the transaction related to the O2 Daisy mobile business line. Also adjusted on this basis, total revenue decreased 6.5% annually to £2.390bn.

VMO2 attributed this movement to consumer revenue decreasing by 3.8% compared with the first quarter of fiscal 2025, with a 3.9% fall in consumer fixed service revenue and a 3.7% reduction in consumer mobile service revenue. The company said this primarily reflected the impact of prior-year customer reductions, and ongoing competitive pressure in the consumer fixed market, which continued to weigh on ARPU.

Business revenue decreased by 5.1% YoY, driven by a 9.9% tumble in business service revenue. The latter reduction was primarily driven by lower margin products, as the company begins the planned streamlining of the B2B product portfolio.

By contrast, the company’s Wholesale revenue increased by 5.1%, said to be supported by a 12.7% increase in wholesale service revenue, with growth in MVNO revenue and an increase in long-term leases of the fixed network. In addition, approximately £15.4m  of fixed pre-enablement and installation income improved wholesale service revenue, as the company targets scaling and expanding wholesale fixed services.

Looking at the VMO2 customer numbers, the results showed that the firm’s total consumer fixed customer base stood at 5.5 million with a Q1 2026 customer reduction of around 7,000 people – representing a circa 38,000 improvement compared with losses in Q1 2025.

Total mobile connections across the O2 network – including O2, giffgaff, O2 Business, IOT and MVNOs such as Sky and Tesco Mobile – stood at 46.4 million by 31 March 2026. Consumer mobile contract connections totalled 12.5 million, a reduction of approximately 38,000 connections in Q1. The company noted that significantly reduced churn compared with Q4 2015 supported improved momentum with ARPU broadly stable. The wholesale contract connections base increased by around 300,000 vs Q1 2025, reinforcing said VMO2, a strong position in the mobile wholesale market.

Outlining highlights for the quarter, VMO2 pointed to ongoing investment in fibre and 5G mobile, with that £500m invested in the quarter, claimed to now have the UK’s largest 5G Standalone network now available to 86% of the country’s outdoor population. There was a total of 18.8 million UK fixed-line premises serviceable, all with access to speeds of at least 1Gbps. VMO2 now had a full-fibre footprint of 8.7 million premises – a mix of continued fibre upgrades and the nexfibre joint venture footprint.

The quarter also saw the launch of O2 Satellite, which is the first UK mobile network to switch on direct-to-device satellite connectivity, increasing landmass coverage to 95%.

Looking ahead to the rest of the year, VMO2 offered 2026 guidance of a total service revenue decline of 3 to 5% YoY, adjusted for the Daisy transaction and adjusted EBITDA decline of 3 to 5% YoY, again taking into consideration for the Daisy transaction. It committed to an investment of £2bn to £2.2bn. 

 Schüler added: “With a clear customer focus and underpinned by more than half a billion pounds of investment in Q1, we have started the year delivering against our core strategy through the launch of O2 Satellite, a first in Europe.

“We’re expanding our 5G Standalone footprint to be the largest in the country, making continued improvements in customer service and satisfaction, and expanding our fibre footprint to almost nine million premises. We’ll continue to remain focused on delivery in all three of our areas – consumer, B2B and wholesale – while transforming for future success.”