Virgin Media O2 Plans Thousands of Job Cuts to Save £800m
Virgin Media O2 is preparing to shed thousands of jobs as part of an £800m annual savings drive. The company is trying to tackle a £22bn debt pile.
How big the cuts could be
The company is owned jointly by Liberty Global and Telefónica. It says £300m of the savings will come from a 30% smaller employee wage bill over the next two years.
It has not said how many posts that means. The reported ceiling is as many as a quarter of its 16,000 staff. Most of the losses will fall on roles that do not deal with customers directly.
Chief executive Lutz Schüler promised a fuller strategic plan in the coming months. He said the firm was "already progressing and making difficult decisions" on investment and costs.
Where else the money comes from
The full £800m a year is due by 2029. Besides jobs, the plan covers fewer contractors and a review of supplier and supply-chain contracts. The company expects to spend £250m on restructuring along the way.
AI tools are meant to take on more work in customer service, network planning and fault management.
The firm will also stop upgrading its network to full fibre beyond commitments it already has with partners. That build is half complete. Parts of the network not yet converted will get a cheaper upgrade that should lift most of them to 2Gbps speeds by the end of next year.
Wholesale deals and shareholders
VMO2 is looking at wholesale arrangements to reach areas its own network does not cover. It confirmed reports of a near-deal with BT's Openreach that could widen its reach from 19m homes to as many as 25m.
Shareholders may also lose out. The company says it is "reviewing options" on cash payouts this year.
Union reaction and the customer numbers
Prospect's Noel McClean called the proposed reduction "devastating" for those directly affected. The Communication Workers Union said it hopes the losses can be handled on a voluntary basis.
The plan came with quarterly results. In the three months to the end of September the company lost 23,300 broadband customers and 7,800 consumer mobile customers.
Separately, the UK competition regulator has hinted at blocking Nexfibre's £2bn bid for Netomnia. Nexfibre counts Liberty Global and Telefónica among its investors. The regulator would rather see Netomnia go to CityFibre, which is heavily indebted and negotiating with its lenders over a restructuring.
Our view
The missing job count is the key gap. Until the fuller plan arrives, nobody outside the company can say whether the cuts land near the 25% ceiling or well below it. The outcome of the Netomnia decision and the Openreach talks will show how much room the company has to grow instead of just trimming costs.
Source: the Guardian