Virgin Media O2 plans thousands of job cuts and smaller fibre expansion

Virgin Media O2 said on November 3 it plans to reduce its wage bill by 30% as part of an effort to save £800 million by 2029. The British telecoms operator is set to eliminate thousands of jobs and curb its fibre expansion as it seeks to improve profitability.

The company employs 15,000 people and is jointly owned by Liberty Global and Telefonica. It said positions without direct customer contact would account for most of the wage-bill reduction. CEO Lutz Schüler said competition, fibre regulation and technological change made the measures necessary.

The retrenchment comes as Virgin Media O2 faces competition from BT's fibre rollout and smaller network operators offering faster, cheaper connections. Its third-quarter fixed-line customer base shrank by 23,300 to 5.5 million. Revenue declined 5.7% to £2.4 billion, while adjusted core earnings fell 2.6% to £995 million.

Virgin Media O2 said it was discussing access to another operator's network to reach areas outside the coverage of its own network and that of nexfibre. It also plans to upgrade its existing cable infrastructure so that most customers can receive 2Gbps services next year.

Earlier plans involved converting the cable network to fibre and expanding through the acquisition of Netomnia. Britain's competition regulator opposed that transaction. Nexfibre, a venture involving Virgin Media O2's owners and investment firm InfraVia, plans to contest the regulator's reasoning.

Virgin Media O2 said the economics did not justify three fibre networks covering the same areas. Any further fibre spending that it considers strategically justified would be supported off its balance sheet and restricted to locations without alternative network operators, it said.