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Virgin Media O2 Plans Thousands Of Job Cuts Amid £22bn Debt And Cost Slashing
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Up to 4,000 UK jobs to be cut as part of cost-cutting restructuring. Virgin Media O2 carries about £22 billion in debt and lease obligations.
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16 outlets told this the same way.
Debt drives job cuts
Virgin Media O2 is drawing up plans to axe thousands of jobs as it slashes its cost base amid investor concerns about its ability to service its £22bn debt mountain. VMO2 is drawing up plans to make a substantial proportion of its 16,000-strong workforce redundant in the coming months, with one insider suggesting as many as 4,000 jobs were likely to be affected. VMO2’s third-quarter results are due next Tuesday, when a cost-reduction target will be confirmed in financial rather than headcount terms.
Sky News reported that the final numbers on cost reduction were still moving around, and a VMO2 spokesman declined to comment on the redundancy plans. The restructuring is expected to focus on non-customer facing roles, while senior leadership changes are already under way at the company led by chief executive Lutz Schuler.
Union reaction and uncertainty
Prospect said the cuts were "disappointing and very unsettling," and deputy general secretary Noel McClean said the union is "committed to supporting our members through what is a difficult time". Noel McClean said Prospect is also working with employers to explore ways to mitigate the number of redundancies and ensure retraining and redeployment of staff affected. VMO2 has not finalised the number of roles to be cut but it is likely be a sizeable chunk of its 16,000 workforce.
The majority of the affected staff will be in non-customer facing roles and that a number of senior leadership changes are already under way. VMO2 is expected to review its use of contractors and suppliers in conjunction with the job cuts that were first reported by Sky News, while VMO2 declined to comment.
Regulatory pressure and next steps
VMO2 has billions of debt on its balance sheet and is tackling competition from both smaller providers and giants like BT, which has agreed a deal to acquire rival TalkTalk that VMO2 has firmly opposed. The Competition Markets Authority (CMA) has provisionally found competition concerns in VMO2’s £2bn Netomnia deal via nex fibre, with a final decision to come in December. The CMA signalled it may block a £2bn takeover of Netomnia by nexfibre and said its preference would be for CityFibre to acquire Netomnia.
A source close to Netomnia told Sky News that BT’s 6.7% share price surge on Friday "confirms what we have been saying" about regulators and the [nexfibre-Netomnia] merger. Attention now turns to VMO2’s third-quarter results on Tuesday, when investors and employees will be seeking clarity on the cost-reduction target and how it translates into job impacts.