VMED O2 UK Ltd.

This report does not constitute a rating action. Overview Key strengths Key risks Premium positioning and pricing compared with alternative fixed-line telecoms players, which supports solid profit margins. Mature, highly penetrated market and ongoing fiber deployment by competitors will further limit network and speed differentiation. Network is fully upgraded to gigabit speed, and full fiber is being rolled out. Cash flow conversion will remain limited for the next few years by investments in 5G and fiber to the home (FTTH). Strong market position in the U.K. mobile market. Highly leveraged capital structure with S&P Global Ratings-adjusted debt to EBITDA of about 5.5x-5.8x. We now forecast S&P Global Ratings-adjusted EBITDA to remain broadly stable over 2025-2026, as a likely slowdown in

...Operating performance will remain muted in the near-term, but credit metrics will continue to support the current rating. We now forecast S&P Global Ratings-adjusted EBITDA to remain broadly stable over 2025-2026, as a likely slowdown in mobile hardware sales will be offset by marginal growth in the fixed consumer business. This growth in the fixed consumer segment is driven by price increases more than offsetting a decline in the subscriber base. As VMED O2's addressable footprint expands, particularly through nexfibre, the company should continue to gradually gain new customers on its fiber network, but returning to customer growth within the...

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