Millions of O2 and Virgin Mobile Customers Face 11.7% Price Hikes

The publication of the latest Retail Price Index (RPI) spells trouble for customers of O2 and Virgin Mobile, as the providers hand down 11.7% inflation-linked price hikes.

Both O2 and Virgin Mobile—now owned by the same company, VMO2—have written into their contracts annual April price increases of the RPI published in February plus 3.9%. With inflation soaring to its highest level in 30 years, that means punishing bill increases that will add up to £48 to customers’ annual costs.

The Office for National Statistics (ONS) confirmed last week that the RPI for January is 7.8%, its highest level since March of 1991. That means O2 and Virgin Mobile customers will see their mobile bills rise by 11.7% from April.

That’s significantly higher than the 1.4% price increase O2 handed down in April 2021 and the 1.5% hikes Virgin Mobile imposed last July.

Many telecoms providers have adopted these inflation-linked formulas for price hikes over the last couple of years. But Virgin and O2’s competitors largely use the Consumer Price Index (CPI), which tends to be lower than the RPI. 

For example, the BT Group is using December’s CPI (5.4%) plus 3.9%. That puts customers of ISPs BT, Plusnet, and EE Broadband and mobile operator EE in line for 9.4% price increases at the end of March. Vodafone is using the same formula, while TalkTalk is adding 3.7% to December’s CPI, for price increases of 9.1%.

But Not all O2 and Virgin Mobile customers will see the price hikes. Only O2 customers who joined or upgraded after 25 March 2021 will see the hikes, while those who joined or renewed contracts prior to that date will just see their bills go up by the RPI (still a tough 7.8%). Additionally, the price hikes will only apply to the airtime section of the contract—the part of your bill dedicated to calls, texting, and mobile data—and not to charge for your handset.

An O2 spokesperson defended the price hikes: “We recognise price changes are never welcome, and always balance keeping our prices competitive with the need to continue investing in the services that our customers use and love. 

“For most customers the price increase only applies to the airtime part of their bill and with our most popular tariffs costing from as little as 33p per day for superfast data with unlimited minutes and texts, our customers receive incredible value as well as extra perks such as Priority.”

Virgin Mobile says customers who are upset by the price hikes can end their airtime contract without any cancellation fees by contacting Virgin Mobile before 28 February. Typically, customers can’t exit these contracts without penalty because the price increase was written into the terms and conditions they agreed to when signing up.

VMO2’s broadband arm, Virgin Media, hasn’t yet adopted inflation-linked price hikes. Virgin Media announced in January that its broadband, TV, and landline customers will see their bills increase by an average of £4.70 per month, or £56.40 per year, from March.

Meanwhile, television rival Sky also hasn’t adopted an inflation-linked formula but last week announced that its broadband and TV customers will see their bills rise by a typical £43 per year from April.