Virgin Media O2 is to cut thousands of jobs as it seeks to reduce staff costs by 30 per cent over the next two years, the telecoms group said today alongside its third-quarter results.
The company, which employs about 16,000 people, did not give an exact figure for job losses but said most would come from back office and head office roles. The staff cost reduction forms part of a wider target of £800m of cost savings by 2029.
VMO2, which is owned by Telefonica and Liberty Global, has faced rising investor concern over its ability to repay a debt pile of about £22bn, which has pushed the price of its bonds to record lows in recent months. Net debt stood at about 5.6 times adjusted earnings at the end of September.
Lutz Schüler, VMO2’s chief executive, said its decisions were “tough” but “necessary for our future success and growth”.
The group lost 23,300 broadband customers and 49,800 mobile customers in the third quarter. Service revenue fell 3.5 per cent to £2.04bn, according to the company’s third-quarter results, which state the decline on a basis adjusted for the Daisy transaction. Adjusted earnings before interest, tax, depreciation and amortisation were £995.2m, down 2.6 per cent on the same basis.
VMO2 expects overall service revenue to fall by between 3 per cent and 5 per cent this year. The company has come under pressure from the dozens of alternative networks built in recent years, which have held down broadband pricing.
In the results statement, Schüler said the company remained “on track to meet our full-year financial performance guidance”.
The UK’s second-largest broadband provider will also stop upgrading its cable network, which covers about 19 million homes, to fibre. The company said the decision was prompted “by a tough macro-economic climate, an intensely competitive and shrinking broadband market and a paradoxical regulatory direction in fibre”.
Schüler said in the results statement that the company’s fibre footprint now reaches 9.4 million homes.
VMO2 is in talks with Openreach, BT’s network arm, over a wholesale deal that would let it host customers on Openreach’s network in areas its own footprint does not yet reach. Openreach, which supplies network access to competing broadband providers, controls about two thirds of the UK’s wholesale broadband market.
Openreach’s wholesale offers are subject to Ofcom oversight. In September the regulator cleared an Openreach offer of a one-off £50 discount on new full-fibre customers in areas where Virgin Media operates, while it ordered Openreach to withdraw a separate discount of up to £9.50 a month per new full-fibre customer.
VMO2’s owners are lobbying the Competition and Markets Authority to approve a £2bn takeover of Netomnia, the UK’s fourth-largest broadband provider, after the watchdog said it could block the deal because of the overlap between the two networks.
The CMA provisionally found competition concerns in the wholesale supply of fixed broadband services on 2 October. Its statutory deadline for the in-depth inquiry is 15 December 2026.
VMO2’s shareholders agreed the Netomnia deal in February through Nexfibre, their joint venture with French private equity firm InfraVia Capital. As part of the transaction, VMO2 was set to receive £1.1bn in cash in return for migrating 4.6 million customers to the Nexfibre network.
The company said further details of its strategic plan would be set out with its full-year results at the start of next year.
