Virgin Media O2 clients hit with 8.8% price rises

Virgin Media O2 customers are facing a ‘lose-lose choice’ between the highest mid-contract broadband and mobile price rises, or crippling exit fees running into hundreds of pounds, the consumer group Which? has warned.

Virgin Media and O2 are expected to go ahead with price increases of 8.8% this April – the latest RPI figure of 4.9% plus an arbitrary 3.9%. These will be the highest hikes in percentage terms out of any of the major broadband or mobile firms. The alternative for those under contract is an exit fee and these can be exorbitant.

Which? analysis shows that if average customers were with both Virgin Media and O2, they could face a combined exit fee as high as £692.37 if 12 months were still remaining on their contracts. Since the companies merged, Virgin Mobile customers have been migrated to O2 and the providers began offering bundled deals.

Based on responses from Which?’s latest broadband survey and analysis of mobile market data, the consumer champion has also calculated how much an in-contract Virgin Media or O2 customer could see their payments rise by. This is despite Which? calling for telecoms firms to halt plans for price rises, and Ofcom proposing a ban on inflation-linked price hikes.

Virgin Media customers face the largest hike – both as a percentage and in pounds and pence – out of any of the major broadband firms due to the provider’s use of RPI, which is discouraged by the ONS (it says RPI is not a good way to measure inflation as it is likely to inaccurately reflect price changes).

Which?’s latest analysis has found this could result in an increase of £39.14 to the annual broadband bill of the average Virgin Media customer.

The research suggests that the average Virgin Media broadband customer pays £37.06 a month, so this £39.14 figure works out as average customers paying for an extra thirteenth month.

Which? calculates that if the average Virgin Media broadband customer did not want to be hit with this price hike and wanted to switch away instead, they would face an exit fee of £403.91 if they were to leave their contract 12 months early.

The problems with Virgin Media’s unfair price hikes are compounded by woeful customer service, with Ofcom already investigating claims the company has made it difficult for customers to cancel their services. In Ofcom’s latest complaints figures (for July to September 2023), Virgin Media was also the most complained about broadband, landline and pay-TV provider. Virgin Media has also consistently underperformed in Which?’s annual broadband provider rankings – receiving just one star for customer service.

Meanwhile the average O2 Sim-only mobile customer faces a £26.44 annual price hike – this is the highest increase of any network by percentage. This is higher in pounds and pence than EE and Three, but slightly less than Vodafone which has higher prices overall on average. It is higher than the UK average of £20.76 identified by Which?’s research. O2 does note that some customers, who took out their contracts prior to March 2021, will pay increases which are RPI-only without the 3.9% added on.

Which? calculates that the average in-contract Sim-only O2 customer currently pays around £25.04 a month. The average customer who did not want to be hit with this price hike and wanted to switch away instead would face an exit fee of £288.46 if they were to leave their contract 12 months early.

Virgin Media has shared figures with Which? that state an average customer will see increases of £4.16 per month or £49.92 a year – however this incorporates TV as well as mobile and broadband.

The company says that for O2 mobile price increases are only applied to the airtime portion of a customer’s bill (i.e. minutes, text messages and data) – not their total monthly bill.

These inflation-linked price hikes come just 12 months after O2 imposed price increases of more than 17% on customers, while for Virgin Media these increases were 13.8% on average.

The consumer champion is calling for all providers including Virgin Media and O2 to scrap this year’s hikes and implement Ofcom’s proposals as soon as possible so new customers are not trapped in these unfair contracts.

Ofcom should also press ahead with its positive move to ban inflation-linked price rises which will prevent customers facing these unfair and unpredictable price hikes.

Rocio Concha, Which? Director of Policy and Advocacy, said “Virgin Media and O2 customers face a lose-lose choice between huge price hikes and crippling exit fees. This comes on top of up to 17 per cent increases faced by some O2 customers last year – few would have anticipated such steep price rises when they signed up.

“Ofcom has clearly stated that the practice of inflation-linked mid contract price rise terms can cause substantial consumer harm. Telecoms firms must do the right thing and immediately scrap these rises, rather than cynically taking the opportunity to cash in one last time at the expense of their customers before new rules take effect.”