O2 hikes annual mid-contract price rise for mobile plans

O2 has announced an update to its annual mid-contract price rise for mobile customers.

From 23 October 2025, the standard yearly increase will rise from £1.80 to £2.50 per month.

The change will apply to both new and re-contracting pay-monthly customers, while existing customers will receive 30 days' notice and the option to cancel their contract without penalty.

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Annual price rise policy update

Under the revised policy, O2 contracts will be subject to a £2.50 per month annual increase each April, effective from 23 October 2025.

The move represents a 70p rise on the previous £1.80 annual increase and follows Virgin Media's recent announcement that it will raise its own yearly price rise from £3.50 to £4 per month on broadband and TV deals.

For customers with a Virgin Media Volt broadband and mobile plan, this will mean combined annual increases of £6.50 per month each April.

O2 is applying the new pricing policy to both new and existing customer contracts. Existing customers are being notified by email and given a 30-day window to cancel their contract without penalty if they choose.

An O2 spokesperson said: "With demand for mobile data at an all-time high, we're introducing a 70p per month increase to annual price rises for O2 customers, effective each April.

"An annual rise of £2.50 a month - around 8p a day - continues to represent excellent value for services that customers are using more than ever before.

"We've again frozen prices on handset repayment plans and are investing £700m into our mobile network this year to ensure we meet growing demand and give our customers the fast and reliable connectivity they rely on.

"Customers on our social tariffs continue to be exempt from any price changes as part of our efforts to provide support to those who need it most."

While both O2 handset and mobile broadband contracts are affected, data-only and smartwatch plan customers will continue to see smaller annual increases of 75p per month each April.

Are further regulatory changes needed?

Ofcom introduced new rules in January 2025 to make mid-contract price rises more transparent for consumers, but the changes appear to have had unintended consequences.

While the regulator's goal was to improve clarity, the revised framework has allowed providers to set fixed annual increases that can exceed inflation, meaning customers may now pay more overall.

Flat, pounds-and-pence-based rises also tend to hit those on cheaper plans hardest, as the same increase often applies to both entry-level and premium tariffs - a contrast to previous inflation-linked or percentage-based rises, which were more proportional.

Some providers have adopted tiered systems to soften the impact on lower-cost plans, but many major operators - including BT, EE, Virgin Media, and now O2 - continue to apply a single flat rate regardless of the plan's price.

With CPI currently at 3.8%, a typical above-inflation increase of 3.5% would previously have resulted in a total 7.3% rise. By comparison, today's flat-rate model is significantly higher: a £2.50 increase on O2's £23 50GB Classic plan equates to 10.9%, while Virgin Media's £4 rise on its £23.99 M125 Fibre broadband plan represents a 16.7% jump.

Given these growing disparities, there is a strong case for Ofcom to review mid-contract price rise regulations again to ensure customers are better protected from disproportionate increases.