One of the biggest telecom companies in UK is cutting thousands of jobs, changes fibre network expansion plan
British telecoms giant Virgin Media O2 is set to cut thousands of jobs and pull back on its fibre expansion plans as it faces fierce competition in the UK broadband and mobile markets. The company, jointly owned by Liberty Global and Telefonica, announced Tuesday that it aims to save £800 million by 2029, as per a report by news agency Reuters. To hit that target, the company plans to slash its wage bill by 30%, with the bulk of the reductions focused on non-customer-facing roles. The report said that Virgin Media O2 currently employs around 15,000 people.
The restructuring comes as the operator faces pressure from rival BT’s nationwide fibre rollout, as well as dozens of smaller alternative networks ("alt-nets") winning over subscribers with faster, lower-cost broadband connections.
CEO says ‘tough but necessary’ resetVirgin Media O2 CEO Lutz Schüler described the cuts as unavoidable given current market dynamics. He said: “Given the market conditions we face, the regulatory backdrop in fibre and the technological changes sweeping across all areas of the economy, standing still and doing what we’ve always done is not an option”.
In the third quarter, Virgin Media O2 shed 23,300 fixed-line customers, bringing its customer base down to 5.5 million. Total revenue fell 5.7% to £2.4 billion ($3.22 billion), while adjusted core earnings slid 2.6% to £995 million.
Shifting fibre and network strategyThe company had previously aimed to overhaul its legacy cable network with full fibre and grow its reach by purchasing Netomnia, one of the UK’s largest alt-nets. However, the UK competition regulator blocked the proposed deal last month.
In light of the regulatory pushback, Virgin Media O2 stated that market conditions do not justify building “three overlapping fibre networks.” Instead of continuing aggressive proprietary builds, the company is adjusting its infrastructure playbook.
Firstly, it will upgrade its current cable infrastructure, using older technology, to deliver 2Gbps speeds to most customers next year. Further, any future fibre investments deemed strategically sound will be financed off-balance sheet and limited strictly to areas where alt-nets are not present.
The company also said it is exploring wholesale arrangements to deliver services in regions outside the footprint of its own lines and Nexfibre’s network.
The restructuring comes as the operator faces pressure from rival BT’s nationwide fibre rollout, as well as dozens of smaller alternative networks ("alt-nets") winning over subscribers with faster, lower-cost broadband connections.
CEO says ‘tough but necessary’ resetVirgin Media O2 CEO Lutz Schüler described the cuts as unavoidable given current market dynamics. He said: “Given the market conditions we face, the regulatory backdrop in fibre and the technological changes sweeping across all areas of the economy, standing still and doing what we’ve always done is not an option”.
In the third quarter, Virgin Media O2 shed 23,300 fixed-line customers, bringing its customer base down to 5.5 million. Total revenue fell 5.7% to £2.4 billion ($3.22 billion), while adjusted core earnings slid 2.6% to £995 million.
Shifting fibre and network strategyThe company had previously aimed to overhaul its legacy cable network with full fibre and grow its reach by purchasing Netomnia, one of the UK’s largest alt-nets. However, the UK competition regulator blocked the proposed deal last month.
In light of the regulatory pushback, Virgin Media O2 stated that market conditions do not justify building “three overlapping fibre networks.” Instead of continuing aggressive proprietary builds, the company is adjusting its infrastructure playbook.
Firstly, it will upgrade its current cable infrastructure, using older technology, to deliver 2Gbps speeds to most customers next year. Further, any future fibre investments deemed strategically sound will be financed off-balance sheet and limited strictly to areas where alt-nets are not present.
The company also said it is exploring wholesale arrangements to deliver services in regions outside the footprint of its own lines and Nexfibre’s network.
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