Virgin Media O2 Plans to Cut Thousands of Jobs, With Up to 4,000 Roles at Risk

Virgin Media O2, one of Britain's largest broadband and mobile companies, is preparing to cut thousands of jobs in a broad shake-up of the business, Sky News reported on Saturday. People close to the company told Sky News that a substantial share of its 16,000 workers could be made redundant in the coming months. Reuters reported the same plans on Saturday, and the scale of the cuts points to one of the largest rounds of job losses in British telecoms in recent years.

Up to 4,000 jobs could go

The exact number of cuts has not been settled. One insider told Sky News that as many as 4,000 jobs were likely to be affected, which would be a quarter of the workforce. The company is expected to finalise the plans ahead of its third quarter results on Tuesday, when a cost reduction target is due to be confirmed in financial terms rather than as a headcount figure. Most of the losses are expected to fall on staff in roles that do not deal directly with customers. A number of senior leadership changes are already under way at the company, which is led by chief executive Lutz Schuler. The group is also expected to review how much it spends on contractors and suppliers as it looks for savings across the business.

Unions briefed as the company stays silent

Officials at the CWU and Prospect unions are understood to have been briefed on parts of the planned changes. A Virgin Media O2 spokesman declined to comment on the redundancy plans, and the company did not immediately respond to a request for comment from Reuters. People close to the company said the final scale of the cost reduction was still moving and had not been fixed, which leaves thousands of staff waiting to learn whether their roles are at risk.

Debt drives the cuts

Virgin Media O2 is owned jointly by Liberty Global and Spain's Telefonica, and it carries a debt pile of £22 billion. The Financial Times reported in July that the owners were weighing ways to reduce that debt, including cutting the company's dividend and spending less on investment. In September, the Financial Times reported that the shareholders were looking for cost reductions of about £600 million. Investors have grown more concerned about whether the company can service its debts, and Saturday's reports suggest job cuts are now the main route the owners have chosen to reach their savings target.

The company sells broadband, television and mobile services across the United Kingdom under the Virgin Media and O2 brands. Sky, the parent company of Sky News and a rival of Virgin Media O2 in broadband and pay television, cut hundreds of its own jobs in September last year.