Virgin Media O2 sales hit by iPhone 15 apathy
Consumers are holding off on purchasing new handsets as household budgets are being squeezed. Virgin Media O2 (VMO2) has issued a warning about a slowdown in sales due to lacklustre demand for smartphones like the iPhone 15.
Sales Decline and Reasons Behind It
In the second quarter, VMO2 reported revenues of £2.7bn, experiencing a decline of 4.1% compared to the same period last year. The decrease was primarily driven by a drop in handset revenues as consumers opted to hold onto their current mobile phones for longer amidst financial constraints.
Factors Contributing to Slow Demand
The tepid demand for the iPhone 15, released with minimal new features, has also played a role in the sales slowdown. Analysts attribute the declining handset revenue to various factors such as market saturation, lack of innovation, the shift towards budget-friendly SIM-only plans, and ongoing concerns regarding the cost of living.
Forecast and Expectations
VMO2 is anticipating a potential increase in smartphone sales in the second half of the year, traditionally a period when new models are introduced and customers make purchases for the holiday season. The company is banking on the upcoming iPhone 16, set to launch later this year with enhanced artificial intelligence features following a partnership between Apple and ChatGPT maker Open AI.
Challenges in the Telecom Sector
Telecom providers like VMO2 are facing challenges due to stiff competition and a slowdown in demand. Despite experiencing a decline in broadband and mobile customer numbers, VMO2 has been making significant progress in expanding its full-fibre broadband network, reaching 5 million premises.
CEO Statement and Financial Outlook
Lutz Schüler, the CEO of VMO2, remains optimistic about the company's profitability despite the challenging market environment. He highlighted the company's continued investment in networks and services, with over £1bn invested so far in the year, and successful execution of pricing strategies. VMO2 expects a low- to mid-single-digit decline in revenue and profit for the year overall.
