<div id="readability-page-1"><div><div>The chief executive of Virgin Media O2 said he regrets hitting mobile customers with surprise price rises.The price rises triggered an exodus of customers and a rebuke from Rachel Reeves, the Chancellor.Lutz Schüler acknowledged that increasing bills for people in the middle of their contracts “wasn’t the best decision”, adding that he had “not expected that reaction”.Speaking to The Telegraph at Mobile World Congress in Barcelona, he said: “It is all about the customer, and that was not customer-friendly, and the market has reacted to it.“We have learned, and therefore we were also happy to commit to government at the round table that we won’t do it again.”O2 sparked a backlash in October when it announced that mobile bills would rise by £2.50 a month, equivalent to £30 a year, from next month. That is 70p – or 40pc – higher than the £1.80 increase customers were informed of when they signed up to their contracts.The surprise move prompted interventions by Ms Reeves and Liz Kendall, the Technology Secretary, who asked the regulator Ofcom to review pricing in the telecoms sector.Martin Lewis, the consumer rights campaigner, said O2 had made a “mockery” of new rules forcing providers to tell customers how much their bills will increase in pounds and pence, rather than using complex inflation-linked figures. Those rules were designed to improve transparency, but in reality have simply locked in inflation-busting price increases across the industry.Virgin Media O2 (VMO2), alongside rivals including BT, VodafoneThree and Sky, last month signed up to further voluntary commitments on price rises as part of a new government charter.</div></div><div><div>But customers have voted with their feet. O2 lost 165,000 customers in the last three months of the year. Schüler said his company attributed around 110,000 of those directly to the price increases.<h2>Global competition</h2>While the German executive acknowledged that wrong-footing customers was a mistake, he maintained that mobile and broadband bills in the UK remained good value relative to global standards and argued that further increases were necessary to help tackle patchy coverage.He said: “In other continents, the relative spending for connectivity is higher. Also, 20 years ago in Europe, it was higher. So if you want to strike the balance between investment and customer protection, I think we lost the balance a bit.”Schüler warned that Britain was falling behind international peers in terms of economic growth and, in particular, in the rapidly developing field of AI.While he admitted “that ship has sailed” when it came to Britain competing with major chatbot makers such as OpenAI, the VMO2 boss argued that there were opportunities for telecoms providers to cash in on the new technology.He cited the example of US giant Verizon, which provides private networks to major companies specifically designed to handle high-capacity AI workloads.“I hate the fact that Verizon is more advanced here than we are,” Schüler said. “And the only difference is they have more money to invest, as simple as that.“I think we’ve been through a period which has been pretty brutal for European telecommunications companies. Look at the share prices. I hope that we wake up in the UK and use some levers we have to gain back a bigger part of the value chain.”O2 has said it will spend £700m on upgrading its mobile network this year and has become the first operator in Europe to launch a satellite mobile service. However, it faces competition from a growing number of smaller rivals that piggyback off the major networks.Fintech firms Revolt and Klarna have both launched mobile services, while energy challenger Octopus is weighing a similar move.Competition will be further fuelled by the regulator’s insistence that VodafoneThree offer competitive wholesale prices to so-called mobile virtual network operators for three years as a condition of its £15bn merger.He said: “That means in the next couple of years we have to invest more in our mobile network to stay competitive with VodafoneThree and at the same time it paves the way for the Revoluts of this world to offer insane, cheap prices. That is not a long-term sustainable solution.”<h2>Future of VMO2</h2>VMO2, which is approaching the fifth anniversary of its formation through a £31bn merger by parent companies Telefónica and Liberty Global, is attempting to turn the corner after a turbulent period.In addition to the price rise controversy, VMO2 has suffered from slowing broadband revenues amid competition from a sprawling array of so-called “altnet” rivals. The company last month warned it expects revenues and profits to decline by up to 5pc this year.The telecoms group is now rekindling efforts to become the biggest competitor to BT in a cut-throat broadband market.VMO2, which has 5.8 million broadband customers, completed a £2bn takeover of Netomnia, the second-largest altnet, last month. The complex deal, conducted by Telefónica and Liberty Global alongside French private equity firm InfraVia Capital, will take the company’s total network access to around 20 million homes.The takeover could fire the starting gun on a wave of consolidation across the sector. Many inadequate rivals that cropped up during an era of cheap borrowing are now straining under huge piles of debt. London-focused altnet G.Network was placed into administration in January, just weeks after being snapped up by vulture capital firm FitzWalter.The £2bn price tag for Netomnia has been viewed as toppy by some industry analysts, while CityFibre, the UK’s largest altnet, cried foul on competition grounds, warning against an “ineffective duopoly” of BT and VMO2.Schüler said the deal was an “offensive” move that would strengthen the company’s challenge to BT’s network division Openreach, while arguing that mergers were needed as many debt-laden altnets teeter on the brink of collapse.“The altnet market as it is today is not sustainable, so consolidation needs to happen. And here we are. We do that consolidation,” Schüler said. “We are creating more competition because we are becoming the biggest challenger to Openreach.”The fighting talk comes even as an uneasy relationship between VMO2’s parent companies has cast doubts over the future of the joint venture.Telefónica, which is partly owned by the Spanish government, was thrown into chaos last year following the dramatic ousting of José María Álvarez-Pallete, its long-serving chief executive. His departure is widely thought to have been driven by Pedro Sánchez, Spain’s socialist prime minister, who instead appointed Blackburn-born executive Marc Murtra to the top job.Murtra forced VMO2 to ditch its plans for a new wholesale business to challenge BT. It had been aiming to raise £1bn by selling a stake. Telefónica was then reported to be exploring plans to buy out Liberty Global’s 50pc stake in VMO2, though any deal would be complicated by the UK company’s £22bn debt pile.Schüler, who is now Britain’s longest-serving telecoms boss, is sanguine about such machinations.“I think from the outside it looked a bit more disruptive than it was,” he said. “My two shareholders are aligned on strategy. They now do this Netomnia deal together, and I think we end up in a pretty steady situation.”</div></div></div>

Virgin Media O2's CEO, Lutz Schüler, expressed regret over surprise price hikes for mobile customers, which led to a loss of 165,000 customers and criticism from government officials. He acknowledged the decision was not customer-friendly and committed to avoiding similar actions in the future. Despite the backlash, Schüler argued that UK mobile and broadband prices remain competitive globally. VMO2 plans to invest £700m in network upgrades and aims to strengthen its position against competitors in the broadband market, while facing challenges from new entrants and regulatory pressures.

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Virgin Media boss: I regret hitting customers with surprise price rises