O2 cranks prices mid-contract, essentially telling customers to like it or lump it

Ofcom 'disappointed' by decision that 'goes against the spirit of our rules'

Updated Britian's comms regulator has criticized O2 for hiking prices beyond what customers agreed to, exploiting a loophole in rules designed to end unpredictable mid-contract increases.

Millions of subscribers to the O2 network – now merged with Virgin Media as VMO2 – could face bills rising up to 40 percent more than expected from April 2026, a move Ofcom called disappointing.

"This goes against the spirit of our rules which are designed to ensure greater certainty and transparency for customers when they sign up," an Ofcom spokesperson told The Register.

New regulations that took effect in January 2025 banned inflation-linked price rises for new contracts, requiring providers to specify increases upfront in pounds and pence. But the rules also give customers penalty-free exit rights if prices rise beyond agreed terms — and O2 is using this as cover for bigger increases.

"We want customers to have certainty about their monthly mobile bills so they can plan their household budgets," Ofcom told us. "That's why earlier this year we banned unpredictable price rises linked to inflation and instead required providers to tell customers upfront in pounds and pence about any increases in their contract."

Inflation-linked price variation terms became increasingly common in recent years. Many providers made annual price rises linked to inflation, plus an additional fixed percentage on top (often an extra 3.9 percent).

Financial expert Martin Lewis warned that O2 is following Sky's playbook: "while impacted customers can leave penalty-free — and many should — we know few will. Most will likely just suck up a rise that was more than they were told when they signed up."

The big concern, as Lewis states, is that other mobile providers will feel emboldened to follow in O2's footsteps and simply roll out a mid-contract price rise, telling customers to leave if they don't like it.

PP Foresight telecoms analyst Paolo Pescatore agreed, telling The Register that O2 is pushing the boundaries of what the regulator stipulated. He said the mobile operator should focus on "retaining customers in a cutthroat market."

O2's latest quarterly earnings revealed that mobile revenue dipped one percent to £1.43 billion ($1.88 billion).

Another commenter on X pointed out that for many users their device will be part of their contract, and so leaving would complicate matters.

"For those still paying off their device, they can only cancel penalty-free if they pay that bill off in full – which many won't be able to afford to do either within the 30-day time limit or on top of another monthly plan elsewhere," the post states.

For its part, O2 defended the move by saying that demand for mobile data was at an all-time high. It pointed out an annual rise of £2.50 per month equated to eight pence a day.

Customers on social tariffs will continue to be exempt from any price changes, O2 said.

Ofcom has now written to the major mobile companies reminding them of their obligations to treat customers fairly.

The regulator also told customers that a provider must give 30 days' notice and let them exit a contract penalty-free if they raise prices beyond what was agreed when first signing up. That means customers are free to take a new deal – either with the existing provider or a new one.

"We encourage any customer who wants to avoid these price rises to exercise their right to exit without penalty and sign up to a new deal," the spokesperson told us.

Ofcom's other tips include shopping around via price comparison sites and using its Map your Mobile tool to see which provider offers the best coverage in your area. ®

Updated at 9.09 UTC on October 31, 2025, to add:

O2 contacted The Register following publication of this article with an additional statement. A spokesperson told us:

"As acknowledged by Ofcom in its letter to providers, its rules do not prevent companies from increasing annual price changes – for example, to invest in improving networks. The changes we have announced in no way breach any regulatory rules.

"We appreciate that price changes are never welcome, but demand for mobile connectivity is greater than ever."