Virgin Media O2 is preparing to cut thousands of jobs as the telecoms company looks to reduce costs in the face of billions of pounds of debt and intensifying competition, the BBC understands. The broadband provider has not finalised how many roles will go, but the reduction is expected to represent a sizeable chunk of its 16,000-strong workforce. The cuts were first reported by Sky News.
According to the company's latest accounts, VMO2's total debt stood at £27.2bn as of 30 June, against assets worth £45.9bn, leaving the firm with a heavy interest burden as it tries to stay competitive in a crowded market.
Most of the affected staff are expected to be in non-customer facing roles, and a number of senior leadership changes are already under way. VMO2 is also expected to review its use of contractors and suppliers alongside the job reductions. The company declined to comment.
The Prospect union, which represents VMO2 staff, described the cuts as "disappointing and very unsettling". Deputy general secretary Noel McClean said the union is "committed to supporting our members through what is a difficult time, as well as also working with employers to explore ways to mitigate the number of redundancies and ensure retraining and redeployment of staff affected".
VMO2 is facing pressure from cheaper alternative network operators such as Hyperoptic, Community Fibre, Gigaclear and YouFibre, as well as from larger rivals. It has opposed BT's agreed deal to acquire TalkTalk, calling it a "stitch-up" that would allow its competitor to "tighten its grip" over the market. BT has said the takeover provides "a safety net" for TalkTalk customers, whose broadband provider faced collapse without the deal.
VMO2 had sought to counter the growth of altnets by agreeing to buy competitor Netomnia for £2bn through nexfibre, a joint venture owned by VMO2's owners. However, the Competition and Markets Authority has provisionally found competition concerns in the transaction, with a final decision due in December — a development that drew anger from VMO2.
Separately, BT's share price jumped 7% on Friday after the Financial Times reported that VMO2 was close to agreeing a deal to use its rival's fibre broadband network. The newspaper reported that VMO2 was minded to proceed after halting upgrades and expansion of its own infrastructure to ease concerns over its debt pile. The BBC has been told the agreement is very close and that VMO2 is highly likely to announce it will stop all investment in fibre when it reports results on Tuesday.
Additional reporting by Ben King.
Sources: BBC News UK.