At their AI investor day earlier this month Tim Höttges, CEO of Deutsche Telekom, was pretty clear in his views on network operators of the virtual kind. Responding to a question about where AI agents would reshape the competitive landscape, he turned to (on) MVNOs:
“The biggest problem of this industry are MVNOs. The MVNOs are always hanging around everywhere and trying to make cheap offers. To be honest, MVNO is a very intransparent market. So if the agent is becoming intelligent, the agent understands that there are a lot of rebalancing elements in the MVNO tariffs. Hopefully it finds out that the MVNOs normally are not so cheap as they do. There’s always something hidden: no handsets included, their first six months for free, or whatever. And MVNOs anyhow are shit.”1 Quite the tirade.
At the FDM CCS Insight Predictions event in London this week, Darren Purkis, CFO at VodafoneThree appeared to project a similar, though less direct view suggesting that MVNOs unwilling to toe pricing lines may well need to find new homes for their customers. I wasn’t sympathetic. If you’ve sold wholesale, don’t complain afterwards.
On the same MVNO focused panel, Alex Franks, Group Director at Tesco Mobile and Tesco Telecoms, offered a far more positive framing, as you might expect, pointing towards convergence, the idea that mobile sits naturally within the broader arc of brand loyalty in the consumer relationship. Which makes perfect sense if one of your parents operates the largest loyalty programme in the UK.
Tesco Mobile is the UK’s largest MVNO, with 5.9 million customers and £1.23 billion in revenue for the year ended 31st December 2025, numbers I previewed in the September 2026 Round Up. Franks cited 6.1 million customers during the panel, a figure that likely reflects growth in the ten months since year end. The latest full accounts offer a more nuanced story with revenue growth of 11.3%, handset sales up 18.3%, yet net profit of just £1.7 million on that base. Net funding costs absorbed over 81% of operating profit. An impairment charge on the handset book rose 40.2% to £43.1 million.
The pricing opacity Höttges describes is both a commercial weapon and a structural vulnerability. If AI-assisted comparison erodes the ability to bundle, obfuscate and discount selectively, the MVNO margin position, already thin, gets harder to defend, unless the brand loyalty thesis Franks outlined holds in practice what it promises in theory.
Finsur’s latest company analysis covers the FY2025 picture in detail: the revenue drivers, the handset book, the £550 million securitisation facility, the impairment trends, and what the first ever dividend signals about where this business thinks it stands. Company Analysis: Tesco Mobile FY2025 — £150
Peace,
sb.
https://www.telekom.com/en/investor-relations/publications/capital-markets-days/ai-investor-day