Virgin Media O2 to cut thousands of jobs in £800 million cost-saving drive

Virgin Media O2 CEO Lutz Schuler stated the changes as difficult but necessary. "Given the market conditions we face, the regulatory backdrop in fibre and the technological changes sweeping across all areas of the economy, standing still and doing what we’ve always done is not an option," Schuler stated in an official statement. However, the cuts could affect a sizeable portion of its workforce. Prospect, a union representing Virgin Media O2 employees, described the announcement as "disappointing and very unsettling".

Noel McClean, deputy general secretary at Prospect, said the union was committed to supporting affected employees and working with the company to explore ways to reduce redundancies through retraining and redeployment. Financial pressures and competition The cost-cutting programme comes as Virgin Media O2 faces growing competition from smaller broadband providers and established players such as BT.

The company has been losing customers, with its latest quarterly results showing a loss of 23,300 fixed-line broadband customers and 7,800 consumer mobile customers in the three months to September. Its total revenue fell 5.7% to £2.4 billion, adjusted core earnings declined 2.6% to £995 million. Virgin Media O2 is also dealing with a substantial debt burden. Its total liabilities stood at £27.2 billion as of June 30, its assets were valued at £45.9 billion, according to its latest accounts.

Company explores deal with BT Alongside the job cuts, Virgin Media O2 is exploring an agreement to use BT's Openreach fibre network to expand its broadband services into areas beyond its existing network coverage. The arrangement would allow Virgin Media O2 to offer services in areas where it does not have its own infrastructure, potentially expanding its reach from 19 million to 25 million homes.

Openreach's network is already used by providers such as Sky and Vodafone, as well as BT's own consumer and business services. The company had earlier planned to expand its footprint through the proposed £2 billion acquisition of Netomnia, one of Britain's largest alternative broadband network providers, through Nexfibre, a joint venture involving Virgin Media O2's owners and investment firm InfraVia.

However, the UK's Competition and Markets Authority (CMA) raised concerns about the proposed deal last month. Nexfibre is planning to challenge the regulator's reasoning. Virgin Media O2 said the market economics did not support "three overlapping fibre networks". Change in network investment strategy Virgin Media O2 is also changing its network investment plans following the regulatory setback. Instead of continuing its planned expansion into full-fibre broadband, the company will upgrade its existing cable network to offer speeds of up to 2Gbps to most customers by the end of next year.

It said future fibre investments would be supported off-balance sheet and limited to areas not covered by alternative network providers. The company is also considering greater use of artificial intelligence in areas such as customer service, network planning and fault management as part of its efforts to improve efficiency. Virgin Media O2 expects to incur £250 million in restructuring costs as it implements the changes.

It is also reviewing its dividend payments to shareholders. The company said its new strategy would focus on creating a leaner organisation with clearer priorities and faster execution.