£30 warning to Virgin and O2 customers after today's news

The Virgin Media O2 logo displayed on a phone screen (Photo by Jakub Porzycki/NurPhoto via Getty Images)

Following this morning’s announcement that the Retail Price Index (RPI) for January was 4.9%, it is confirmed that Virgin Media and O2 will be enforcing mid-contract price increases of 8.8% for the majority of customers from April 1 2024 onwards. Uswitch’s Director of Regulatory Affairs Richard Neudegg is calling for bill payers to check if they are able to save money by switching providers before price increases take hold in April.

Customers of other telecoms providers using the lower Consumer Price Index (CPI) received confirmation in January of their mid-contract increases, while today’s Virgin Media and O2 increases using the higher RPI figure could be among the highest of all UK broadband and mobile suppliers.

Richard Neudegg, said: “Virgin Media and O2 customers have woken to an early alarm call of an 8.8% price increase affecting their TV, broadband and mobile bills from April. While around 36 million mobile users and 11 million broadband users are affected by mid-contract price rises each year, Virgin Media and O2 are two of the few providers to base their price rises on the Retail Price Index (RPI) as opposed to the Consumer Price Index (CPI).

“This means their 2024 price hikes could be among the highest of all UK broadband and mobile suppliers. Most Virgin Media customers will be hit by this increase, following updates to their contracts in 2023.

“O2 customers who joined after 25 March 2021 will also face the RPI increase of 4.9%, plus 3.9% on top. This will affect Pay Monthly tariffs, SIM only tariffs, standard tariffs, mobile broadband tariffs and smartwatch tariffs from April.

“As an example, a Virgin Media customer paying £29 for an 18 month contract will now pay an extra £30.60 per year, and an O2 customer paying £8 per month for a 32GB SIM only deal will now pay an extra £8.40 per year.

“Using future inflation as the basis for a price increase means it’s impossible for consumers to know the scale of their bill change when they sign up for a deal. Ofcom is currently weighing up a new ban on inflation-linked and percentage-based price hikes which, while welcome, will come too late for this round of price hikes.

“If you’re out of contract or coming to the end of your existing mobile or broadband deal, changing providers to a lower cost option could help you offset the April price increases.

“There are also several providers which do not raise prices mid-contract, such as Hyperoptic and Trooli for broadband, and SMARTY and Lebara for mobiles. So it’s well worth looking elsewhere if you want to avoid unpredictable hikes.”

A Virgin O2 spokesman said that, on the fixed side, vulnerable customers on their social broadband and Talk Protected landline services are exempt, and on the mobile side the effective price increase is 5% because they only apply price increases to customers’ airtime plans.

They added: “2023 was a record year for traffic on our networks as customers used our mobile and broadband services more than ever. We are investing heavily to ensure we continue to provide the fast and reliable connectivity our customers rely on, and the amount we receive from price increases is greatly outweighed by the £5m we invest every single day to upgrade our networks and services to give customers a better overall experience.

“It’s clear that we continue to offer excellent value, with customers paying less and receiving more. Recent independent analysis found that the cost of telecoms services has fallen by a fifth since 2017, while at the same time speeds and usage have increased significantly.

“We will be writing to all impacted customers directly to explain when, why and how any price changes may come into effect.”

From 1 April, Virgin Media customers will see their bills increase by 8.8% – equivalent to RPI+3.9%. This works out at an average of £4.16 per month and equivalent to 13p per day.

For a Big Bundle customer currently paying £31.99 a month, their new bill from 1 April will be £34.81 – an increase of £2.82 a month.

From 1 April, O2 customers will also see their bills increase. This price increase only applies to the airtime part of a customer’s bill – not their total monthly bill – and customers whose plans started before 25 March 2021 will receive a price increase of RPI alone.

Across all O2 customers, the effective average price increase is 5%, which is below the price rises implemented across the whole bill by some other mobile operators.