Virgin Media O2 has confirmed plans to cull 2,000 jobs as some fixed and mobile customers also head for the exit.

Nick Wood

July 25, 2023

4 Min Read
VMO2 gigabit van

Virgin Media O2 has confirmed plans to cull 2,000 jobs as some fixed and mobile customers also head for the exit.

Reports emerged in late June that the cableco was planning a round of redundancies, with the rumoured figure ranging between 800 and 2,000. And earlier this year, the Communication Workers Union (CWU) said it held talks with VMO2 about the future of 1,357 ‘at risk’ positions at the company.

It seems those positions – and others – were more than ‘at risk’.

“As we continue to integrate and transform as a company, we are currently consulting on proposals to simplify our operating model to better deliver for customers, which will see a reduction in some roles this year,” said a VMO2 spokesperson, in an emailed statement.

VMO2’s headcount has remained broadly flat since the 2021 completion of the merger between O2 and Virgin Media, and given that identifying and eliminating overlap is part and parcel of an integration, redundancies are an unwelcome but unsurprising part of that process.

“It is an unfortunate consequence of a merger,” noted independent telco analyst Paolo Pescatore. “Should the Vodafone and Three deal get the green light, it is highly likely we will see a reduction in the combined workforce.”

Indeed, VMO2’s redundancies will contribute to the gloom hanging over the UK’s telco sector workers, with altnets and incumbents alike wielding the axe. BT plans to cut its workforce by a staggering 55,000 by fiscal 2028-30, and Vodafone has just embarked on a turnaround that will see 11,000 staff let go. On top of that, there are the well-documented big tech redundancies made by Amazon, Google, Meta and Microsoft.

“We’ve seen a correction in workforce across all sectors, most notably big tech. We are now starting to see this transcend into other verticals,” Pescatore said.

VMO2 aims to complete the job-cutting by the end of this year. Some have already left the company, others are currently being consulted, while some have yet to be informed.

“While we know any period of change can be difficult, we are committed to supporting all of our people and are working closely with the CWU and Prospect [union] along with our internal employee representatives as we have open and honest conversations on the future direction of our business,” said VMO2’s spokesperson.

The confirmation arrived the same day as VMO2’s second quarter financial report, and it seems that some customers – as well as staff – are also on their way out.

VMO2 ended June with 5.8 million fixed-line customers, 24,700 fewer compared to the end of Q1, which the company attributed to price rises in April in May. That figure includes a 15,300 fall in broadband customers.

Higher prices were also blamed for a 1,500 decline at its postpaid mobile operation. Its total mobile subscriber base fell by 991,300 connections, as MVNO Lyca Mobile switched from O2’s network to EE’s.

Despite the headwinds, VMO2’s gigabit network expansion rumbled on at a steady pace. It passed an additional 175,500 premises in Q2, taking its total footprint to 16.4 million. It remains on track to complete the upgrade from hybrid fibre coaxial (HFC) to FTTP in 20280.

On the mobile side, its 5G network went live in a further 2,800 towns and cities and is on course to cover 50% of the population this year.

On the financial side, revenue grew 6.2% year-on-year to £2.71 billion, driven by mobile, which grew sales by 4.7% due to price increases. This more than offset the 3.8% decline at the consumer fixed-line business, as higher prices led customers to curb their spending on home phone use and TV packages.

Meanwhile, adjusted EBITDA climbed 4.6% to £1.02 billion, as price hikes and synergies more than offset higher energy costs.

“Amidst higher costs, rising usage and continued investment, we executed necessary price increases in line with our expectations with the impact starting to flow through to our Q2 revenue and EBITDA growth,” said VMO2 CEO Lutz Schüler, in a statement.

“Demand for our award-winning connectivity remains, and our significant network investments and service improvements ensure we can meet all customer needs today while preparing for the decades ahead,” he said. “For the remainder of the year we are focused on building commercial momentum, realising the synergies of the joint venture and future proofing our networks.”

 

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About the Author(s)

Nick Wood

Nick is a freelancer who has covered the global telecoms industry for more than 15 years. Areas of expertise include operator strategies; M&As; and emerging technologies, among others. As a freelancer, Nick has contributed news and features for many well-known industry publications. Before that, he wrote daily news and regular features as deputy editor of Total Telecom. He has a first-class honours degree in journalism from the University of Westminster.

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