Virgin Media O2 to cut thousands of jobs in £800m savings drive

Virgin Media O2 is to cut thousands of jobs and scale back its fibre broadband expansion as part of an £800 million cost-cutting programme announced on 3 November, as the telecoms operator seeks to improve profitability amid intensifying competition and mounting financial pressures.

The company, jointly owned by Liberty Global and Telefónica, plans to reduce its employee wage bill by 30 per cent, generating approximately £300 million in savings by 2029. It employs around 16,000 people, although it has not confirmed the number of redundancies, with the majority of affected positions expected to be non-customer-facing.

Chief executive Lutz Schüler said the reductions were necessary to secure the company’s future. “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,” he said.

The wider savings programme will include reducing expenditure on contractors, reviewing supplier agreements and increasing the use of artificial intelligence across customer service, network planning and fault management. The company is targeting £800 million in annual savings by 2029 and expects to incur £250 million in restructuring costs.

The announcement coincided with the publication of its third-quarter results, which highlighted the competitive pressures facing the business. Virgin Media O2 lost 23,300 fixed-line broadband customers and 7,800 consumer mobile customers in the three months to September, while total revenue fell 5.7 per cent to £2.4 billion and adjusted core earnings declined 2.6 per cent to £995 million.

The operator is also changing its approach to broadband infrastructure investment, abandoning plans to expand its full-fibre network beyond existing commitments. Instead, it will upgrade its existing cable infrastructure to deliver speeds of up to 2Gbps to the majority of customers by the end of 2027.

Virgin Media O2 said market economics did not support “three overlapping fibre networks”, referring to the competition between Openreach, its own infrastructure and smaller alternative network providers. Its previous expansion strategy included the proposed £2 billion acquisition of Netomnia through Nexfibre, a joint venture involving its owners and investment firm InfraVia, but the Competition and Markets Authority provisionally raised competition concerns about the transaction last month.

To expand its broadband coverage without building additional infrastructure, the company confirmed it was exploring wholesale arrangements with rival network operators. This includes discussions about accessing BT’s Openreach network, which could extend its services beyond its existing footprint of approximately 19 million premises.

The company said future fibre investment would be restricted to areas where it made strategic and economic sense, while it would continue investing in its 5G+ mobile network.