Virgin Media O2 to axe thousands of jobs in sweeping shake-up

The telecoms giant Virgin Media O2 (VMO2) is to axe thousands of jobs as it slashes its cost base amid investor concerns about its ability to service its £22bn debt mountain.

Sky News has learnt that VMO2, which is jointly owned by Liberty Global and Telefonica, is drawing up plans to make a substantial proportion of its 16,000-strong workforce redundant in the coming months.

Sources close to the company said precise numbers had still to be finalised ahead of its third-quarter results next Tuesday, when a cost-reduction target will be confirmed in financial - rather than headcount - terms.

They conceded, though, that layoffs at VMO2 would be in the thousands, with one insider suggesting as many as 4,000 jobs were likely to be affected.

Trade union officials at the CWU and Prospect are understood to have been briefed on some of the impending transformation plans.

The majority of the affected staff will be those in non-customer facing roles, according to one insider, while a number of senior leadership changes are already under way at the company led by chief executive Lutz Schuler.

VMO2 is also expected to review its use of contractors and suppliers in a bid to bring down costs.

"The final numbers on cost reduction are still moving around," said one person close to the situation.

A VMO2 spokesman declined to comment on the redundancy plans.

The quarterly results will be presented against a backdrop of mounting fears about the company's debt pile, with the price of its bonds falling sharply during the summer.

Next week's update is likely to point towards a broader strategic transformation of VMO2's business at a time of lacklustre growth in the UK economy.

The Financial Times reported in July that VMO2 was considering options to cut its indebtedness, including slashing its dividend and capital expenditure.

When confirmed, the job losses at VMO2 will add to significant layoffs at BT Group and Vodafone Three as telecoms operators seek to become more efficient because of rising cost pressures.

Sky, the immediate parent of Sky News and a competitor to VMO2 in the provision of broadband and pay-television services, also cut hundreds of jobs in September last year.

The looming restructuring at VMO2 comes amid a shake-up of Britain's telecoms market being driven by competition policymakers and the recent collapse of TalkTalk Telecom Group.

BT's emergency takeover of TalkTalk has angered rivals fearful that it will entrench the market power of the former state monopoly and its Openreach infrastructure division.

The FT reported this week that VMO2 was nearing a deal to use Openreach's network in parts of the country to extend its footprint from 19 million to as many as the 25 million homes covered by Openreach.

VMO2 is also expected to halt its own build-out programme to reduce its capex budget.

A number of fibre altnets have collapsed in the last two years because of the industry's deteriorating economic dynamics.

CityFibre's efforts to become the most significant rival to Openreach have been stymied by a large debt pile of its own, which it is now in talks to restructure by asking some lenders to take a significant haircut.

The Competition and Markets Authority (CMA), which was asked to fast-track a review of BT's TalkTalk deal, has also sparked anger at VMO2 by signalling that it may block a £2bn takeover of Netomnia by nexfibre, a wholesale fibre joint venture whose participants include both of VMO2's shareholders.

Instead, the CMA said its preference would be for CityFibre to acquire Netomnia in order to create a stronger challenger to Openreach.

Its statement is being vigorously opposed by Netomnia's own shareholders.

A source close to one said that BT's 6.7% share price surge on Friday - on the back of the news about Openreach being used by VMO2 - "confirms what we have been saying, that Ofcom's intent to create competition died when they went against the [nexfibre-Netomnia] merger".

"The logic of Ofcom and the CMA is not rooted in reality.

"Hopefully they will realise that in time to prevent more damage to competition in the UK market."

Sources said that Netomnia's shareholders were scheduled to meet both regulators next week to protest at the unfolding situation.

(c) Sky News 2026: Virgin Media O2 to axe thousands of jobs in sweeping shake-up