Virgin Media O2 (VMO2) has reported a mixed start to its 2026 financial year, characterized by a dip in first-quarter revenues countered by a stabilizing customer base and an aggressive infrastructure investment strategy. The UK communications giant is navigating a turbulent market landscape, attempting to balance short-term financial softness with long-term network expansion.
According to the company’s Q1 2026 financial results, total service revenue fell to £2,007.9m
, representing a 3% year-over-year decrease when adjusted for the Daisy transaction. Total revenue for the period decreased 6.5% to £2.39 billion
, driven primarily by a 3.8% decline in consumer revenue and a 3.9% drop in consumer fixed service revenue. Adjusted EBITDA too saw a decline, landing at £901.7m
, or 3.4% lower year-over-year according to official VMO2 filings.
Despite these financial headwinds, the operator is reporting a positive shift in customer momentum. The consumer fixed-line base stood at 5.5 million, with a net loss of only 6,900 customers during the quarter. This marks a significant improvement compared to Q1 2025, where losses were roughly 38,000 higher, signaling a third consecutive quarter of improving momentum in customer net additions.
Strategic Infrastructure and Network Investments
To reverse subscriber erosion and enhance service quality, VMO2 is doubling down on its “Mobile Transformation Plan.” The company has committed to investing £700m
into its mobile network throughout 2026. This capital is earmarked for the deployment of new masts, small cells, 4G and 5G upgrades and new spectrum deployment to improve reliability and capacity across the UK as detailed in a company announcement.
The investment strategy extends beyond mobile connectivity. VMO2 has been aggressively expanding its gigabit footprint, which reached 18.8 million premises by the complete of 2025. The operator’s full fibre footprint specifically expanded to 8.3 million premises during that period. CEO Lutz Schüler has attributed these results to a core strategy of targeted investment—amounting to more than £2 billion
across the year—focused on “fixing fundamentals” for the customer base.
A key technological milestone mentioned in the recent results is the launch of O2 Satellite. VMO2 claims to be the first UK mobile network to activate direct-to-device satellite connectivity, a move intended to eliminate dead zones and provide a superior network experience for users in remote areas.
The Role of AI and Customer Experience
The company is increasingly leaning on artificial intelligence to stem customer churn and improve operational efficiency. CEO Lutz Schüler has credited AI for improving customer relations, particularly among fixed-line subscribers. This digital transformation coincides with a reported improvement in Ofcom customer complaint numbers, suggesting that the combination of network investment and AI-driven support is beginning to stabilize the user experience.
Although, the mobile sector remains a challenge. Whereas fixed-line trends are stabilizing, total mobile connections saw a decline of 311,800 in the first quarter, bringing the total to 46.4 million. This includes wholesale and MVNO (Mobile Virtual Network Operator) partners, but indicates that the mobile market remains highly competitive, and volatile.
Q1 2026 Financial Summary
| Metric | Value / Change | Note |
|---|---|---|
| Total Service Revenue | £2,007.9m | ↓ 3.0% YoY (Adjusted) |
| Adjusted EBITDA | £901.7m | ↓ 3.4% YoY (Adjusted) |
| Total Revenue | £2.39 Billion | ↓ 6.5% YoY |
| Consumer Fixed-Line Base | 5.5 Million | Net loss of 6,900 in Q1 |
| Total Mobile Connections | 46.4 Million | ↓ 311,800 in Q1 |
Market Outlook and Future Prospects
VMO2 views the first quarter as a foundational period. The company believes that the current “softness” in consumer and business revenue is a temporary byproduct of a turbulent market landscape. By prioritizing network reliability and expanding 5G+ leadership, the operator aims to drive growth in the latter half of the fiscal year.
The broader strategy involves a shift toward “convergence”—offering combined mobile and fixed-line packages that increase customer stickiness. By integrating AI into the customer journey and continuing the rollout of the gigabit network, VMO2 hopes to transition from a period of subscriber loss to one of sustainable growth.
Industry analysts note that the reduction in fixed-line customer losses is a critical indicator. The improvement of approximately 38,000 customers compared to the previous year’s first quarter suggests that the “fixing fundamentals” approach is gaining traction with the UK public.
The next major checkpoint for investors and customers will be the release of the second-quarter financial results, which will reveal whether the £700m mobile investment and AI initiatives are translating into recovered revenue and a growing subscriber base.
Do you think VMO2’s investment in satellite connectivity and AI will be enough to win back mobile customers? Share your thoughts in the comments below.