Tesco Mobile sets aside £118 million for customers who won’t pay for their phones
Key Points
- Tesco Mobile set aside £118.6 million for expected customer defaults, up from £76.4 million
- Write-offs for non-paying customers rose 40% to £43.1 million in a year
- Debts more than 90 days overdue nearly doubled to £18.6 million
- The operator blamed a shift to premium handsets for rising fraud
- Tesco Mobile made £1.7 million profit on £1.23 billion revenue
Tesco Mobile has set aside £118.6 million to cover customers it expects never to pay, up from £76.4 million a year earlier, according to its annual report filed at Companies House.
The report covers the year to 31 December 2025 and was filed on 26 August 2026. Tesco Mobile is a joint venture owned equally by Tesco and Virgin Media O2, and it ended the year with 5.9 million customers.
The amount the operator wrote off for customers not paying rose 40% in a single year, from £30.7 million to £43.1 million.
During the same period, Tesco Mobile added £46.4 million to its pot for expected losses and wrote off £4.2 million as money it will never collect.
Billed debts more than 90 days overdue nearly doubled, from £9.8 million to £18.6 million. Total unpaid customer bills climbed from £40.2 million to £52.3 million over the year.
The operator also sold £5.1 million of debts it had given up on to a third party for £308,000. That works out at around 6p in the pound.
Tesco Mobile put the rise down to the phones its customers are buying. “Higher mix of premium devices invites greater fraud risk,” the directors said, adding that fraudulent activity is becoming more complex and harder to detect.
Postpay customers grew 7% to 4.6 million during the year, and revenue from selling them handsets rose 17.4% to £530.7 million. Customers pay these phones off in instalments over up to 36 months, and Tesco Mobile is now owed £446.8 million on handsets it has already handed over, up from £394.9 million.
The operator runs a credit check on every postpay customer before a sale and will not release most handsets until it receives an initial payment. Any debt still unpaid after two months with no payment plan in place goes to a debt collection agency.
A dedicated credit risk and fraud team now monitors orders daily and has changed processes to add friction for fraudsters. The report also said the team assesses customer affordability across all retail channels.
Tesco Mobile borrows against those handset instalments to fund the phones it sells, and in April 2026 it increased that borrowing facility with the Royal Bank of Canada from £450 million to £550 million. The operator held £442.7 million of that borrowing at the end of 2025.
The company is authorised by the Financial Conduct Authority to act as a credit broker. The report said the FCA’s Telecoms Market Review is currently examining how mobile providers manage their credit responsibilities amid the rise of loan-based phone financing.
Despite revenue growing 11% to £1.23 billion, Tesco Mobile made a profit of £1.7 million for the year. Tesco and Virgin Media O2 took a dividend of £2.7 million in August 2025 and have proposed a further £2.6 million for 2025.
