In its Q4 2023 financial results, the Spanish mobile provider has reported a £1.5 billion impairment in its 50 per cent stake VMO2 due to rising discount rates and broader macroeconomic conditions in the UK.
This was despite VMO2’s contract mobile customer base growing by 19,000 in Q4, while fixed broadband net additions totalled 9,000 over the same period.
"Virgin Media O2 (VMO2) has achieved continued subscriber growth throughout the year, expanding its mobile, fixed and broadband customer base against a challenging macroeconomic backdrop of high inflation and rationalisation of consumer spending habits," the company wrote. "The company has also delivered its revised guidance while focusing on key customer-first initiatives such as inclusive EU roaming and the O2 Priority loyalty scheme.
"The fixed network rollout progressed at an unprecedented pace this year, with 299k PPs in Q4 23. The deployment was primarily on behalf of Nexfibre, where VMO2 is the anchor wholesale tenant. In mobile, it has reached the target of 50 per cent UK outdoor 5G population coverage and is now committed to meeting the Government’s stated target of providing 5G Stand Alone coverage in all populated areas of the UK by 2030."
VMO2 was valued at £31 billion when it was formed following the merger between Virgin Media and O2 in 2021 by parent companies Telefonica and Liberty Global. But its valuation has come under pressure after the recent rise in interest rates pushed up the cost of borrowing.
Telefonica said that it expects the downturn to impact future cashflow. VMO2 has forecast free cashflow of around £500 million in 2024.