Virgin Media O2 CEO Joins BT in Raising Concern Over UK Biz Rates Hike
The CEO of broadband and mobile giant Virgin Media and O2 (VMO2), Lutz Schüler, has today warned the UK government against reforming business rates in a way that would impose a “hefty hike” on telecoms providers because, he says, it would act as a “disincentive to invest that will be a real kick in the cabinets” to the industry. At a time when they’re already under pressure.
Not unlike the BT Group, VMO2 (inc. nexfibre) are currently in the middle of a major infrastructure programme, which reflects their ongoing roll-out of 5G based mobile broadband technology and the upgrade, as well as expansion, of their existing fixed broadband network to adopt the latest 10Gbps capable XGS-PON full fibre (FTTP) infrastructure.
However, as well as being under pressure from the existing business rates regime and rising costs (i.e. build costs, high interest rates, competition etc.), VMO2 has also had to contend with some disruption to their plans from partner Telefonica’s decision to conduct a Strategic Review of their heavily indebted business (here and here).
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Suffice to say that the last thing VMO2 want to see right now is the government reforming business rates in a way that would significantly raise the tax burden of deploying new fibre and mobile infrastructure. The Chief Financial Officer (CFO) of BT Group, Simon Lowth, recently made similar points via a more in-depth blog post (here); this followed earlier remarks from the group CEO, Allison Kirkby (here).
Lutz Schüler, VMO2 CEO, said (Telegraph):
“A hefty hike in business rates is a direct network tax and a disincentive to invest that will be a real kick in the cabinets to the telecoms industry at a time when business costs in the UK are already eye-watering. We urge the Treasury to rethink its business rates proposals and ensure critical infrastructure investment remains proportionately incentivised and supported in line with the Government’s growth mission.”
A spokesman for HM Treasury said:
“We’re making business rates fairer by introducing permanently lower rates for retail, hospitality and leisure from April, funded by a higher rate on less than 1pc of the most valuable business properties. We’ve also capped corporation tax at 25pc, the lowest in the G7, secured major trade deals with the US, EU and India, and seen interest rates cut five times since the election to help businesses across Britain.”
However, despite the concerns, the Government currently seems set to continue with their changes. The move puts them in the somewhat confusing situation of trying to both encourage investment in new digital infrastructure – sometimes with public money (Project Gigabit, SRN etc.) – while, at the same time, running the risk of discouraging it via higher taxation.
In an ideal world the network operators would probably prefer it if the government excluded digital infrastructure from their changes or introduced another targeted relief from business rates, but there’s currently no sign of that happening.
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on X (Twitter), Mastodon, Facebook, BlueSky, Threads.net and Linkedin.
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Insane for both of those providers to be crying about hikes but the same companies who could find 100 reasons not to pay more than minimum wage
To be fair, some data from Payscale suggests it’s not quite that bad:
https://www.payscale.com/research/UK/Employer=BT_Group/Salary
https://www.payscale.com/research/UK/Employer=Virgin_Media_Inc./Salary
Unless I’m looking at it wrong, most of it seems to be the very bare legal minimum when you calculate it out
But who is making that average, management? On average, my dog and I have three legs.
Who do you think is on minimum wage in BT or Virgin?
In contract price increases to increase again, depending on the budget, perhaps? Sheer greed.
Are we talking about mobile operators that can’t cover white spots without govt co-funding? They only invest money when it is absolutely necessary because something is broken.
The hypocrisy of Virgin complaining about price hikes!
oh the irony!
Not only do VMO2 hike up prices each year, they remove stuff from people’s TV bundles randomly with no compensated reduced price (think TNT Sports but been others) and have no ceiling on out of minimum term contract customers where it just goes up and up past the out of minimum term list price even….
Where did VM remove TNT from packages? It used to be included in their Full House TV but when they repackaged it became an accessory/addon which nobody lost until they swapped out?
Wait they don’t want price hikes.. shocking. Can someone explain that to the £4 increase on my £32 bill each April.
Shame they never raise raise concerns when they stick their prices up every April.
Price rise love it getting a taste of there on medicine
We were with Virgin Media 16 Years and had a problem with the outside pit keep flooding nothing was ever really done to resolve it. Had well over 100 techs were out over that time
But these companies have been massive beneficiaries of public subsidies under project gigabit so why shouldn’t they pay business rates on this infrastcture which they are monetising.
VMO2 haven’t received anything from Project Gigabit. Neither have Netomnia. 2nd and 4th largest networks.
They who have received the subsidies will be paying business rates on the Project Gigabit infrastructure regardless.
They’ve a reasonable complaint to be honest. They’ve seen their tax for employing people go up, if their tax on the infrastructure they have built goes up as well what’s next?
If the drive is for growth taxing work, employment and productive investment while continuing to leave unproductive wealth alone makes no sense. Ratio of wealth to work has moved towards wealth but taxes just keep hitting work harder to make up the difference. One of those produces growth, the other often produces nothing productive at all, it just sits there waiting to go up in value some more.