Virgin Media O2 to cut thousands of jobs as it plans £800m cost savings

Up to 25% of 16,000 workforce could go as telecoms group says it will increase use of AI in areas including customer service

Virgin Media O2 is to cut thousands of jobs in an £800m cost-cutting drive as the telecommunications company aims to tackle its £22bn debt pile.

VMO2, which is jointly owned by Liberty Global and Telefónica, said £300m of the savings target will come from job cuts that will reduce the company’s employee wage bill by 30% over the next two years.

The company did not specify how many jobs this will equate to, but it could be as many as 25% of its 16,000 workforce.

“While we will give a fuller update on the new strategic plan in the coming months, we are already progressing and making difficult decisions to prioritise investments and reduce costs which includes the size of our workforce,” said the VMO2 chief executive, Lutz Schüler.

“Standing still and doing what we’ve always done is not an option and while many of these decisions are tough, they are necessary for our future success and growth. Virgin Media O2 must evolve, and the action needed to make that happen starts now.”

The company, which said that most of the job losses will come from non-customer facing roles, said it intends to increase the use of AI tools in areas including customer service, network planning and fault management. It has offices in London, Reading and Dublin.

The cost-cutting plans, which will save £800m annually by 2029, also include making savings by reducing the use of contractors and reviewing suppliers and supply chain contracts.

Noel McClean, the deputy general of the Prospect union, said that the scale of the cuts will be “devastating” for staff and significantly impact the operation of the business.

“The proposed 30% reduction in the VMO2 workforce [costs] will be devastating for those directly affected and will of course have an impact on colleagues remaining in the business,” he said.

“Industry conditions are tough but this level of cuts will drastically alter the way VMO2 works. As a union we have vast experience of this kind of restructure and stand ready to work with the employer.”

The Communication Workers Union (CWU) said it hoped the large-scale job cuts could be managed on a voluntary basis to minimise the impact on staff.

“The most recent news, briefed out to the media, will undoubtedly leave members feeling stressed and worried about their long-term job prospects,” Stephen Albon, an assistant secretary at the CWU, said. “The CWU wishes to work with the company to mitigate these losses and will be urging the company to explore a voluntary approach to them.”

VMO2 has also moved to reduce capital expenditure by halting investment in upgrading its network to full fibre, which is 50% complete, beyond existing commitments it has with partners.

Instead the company will make a low-cost upgrade that will lead to most of the network that has not transitioned to full fibre being improved to 2Gbps speeds by the end of next year.

VMO2 said it is exploring wholesale deals to expand its services in areas its network does not cover, confirming reports that it is close to a deal with BT’s Openreach to extend its footprint from 19m to potentially 25m homes.

The company also looks poised to slash its dividend, saying it is “reviewing options” relating to cash distributions to shareholders this year.

The business said it expects to incur £250m in restructuring costs.

The cuts were announced alongside VMO2’s latest results, which showed the company shed 23,300 broadband and 7,800 consumer mobile customers, in the quarter to the end of September.

“The direction we’re setting today paves the way for the next chapter of Virgin Media O2: a company that will be leaner, clearer on priorities and faster in delivery,” Schuler said.

The cuts were announced alongside VMO2’s latest results, which showed the company shed 23,300 broadband and 7,800 consumer mobile customers in the quarter to the end of September.

Earlier this month, VMO2 lashed out at a decision to fast-track BT’s £400m rescue of TalkTalk, while at the same time the UK competition regulator has signalled that it might block the £2bn takeover of Netomnia by Nexfibre, whose investors include Liberty Global and Telefonica.

The Competition and Markets Authority said that its preference is for Netomnia to be bought by CityFibre – to create a stronger third challenger to Openreach – but it has a significant debt pile and is in restructure talks with lenders.