Virgin Media O2 is cutting thousands of UK jobs as part of a plan to ramp up the use of artificial intelligence (AI) for "faster decision-making". The telecoms giant, which employs about 16,000 people in the UK, aims to reduce its staff costs by around 30 per cent as it seeks £800million in annual savings by 2029.
Cost savings and job reductions
The company said the bulk of the cost savings, estimated at around £300million, will come from job cuts. While an exact figure for how many jobs will go has not been revealed, Virgin Media O2 said most of those affected would not be customer facing. The overhaul is expected to largely focus on head office, IT and support functions, and the firm has already been cutting senior leadership positions.
As part of the cost reductions, the group will also review its use of contractors and suppliers. Virgin Media O2 said it would ramp up the use of AI to "support faster decision-making and delivery".
CEO statement on necessary decisions
Lutz Schuler, chief executive of Virgin Media O2, 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 and while many of these decisions are tough, they are necessary for our future success and growth."
He added: "While we will give a fuller update on the new strategic plan in the coming months, we are already progressing and making difficult decisions to prioritise investments and reduce costs which includes the size of our workforce. This is not something I take lightly but my commitment to our people is that for those leaving we will treat them fairly and with respect."
Timeline and financial pressures
Virgin Media O2, jointly owned by Liberty Global and Telefonica, said there were no plans to close any of its UK offices, which include sites in Paddington in London, Reading in Berkshire, Leeds, Manchester and Glasgow. Half of the annual cost savings – £400million – will be stripped out next year, with most affected workers to be told by February. The group will give more details at the time of its full-year results in February.
The company is struggling under a debt mountain of more than £22billion and is facing increasing competition from cheaper alt-net broadband providers as well as telecoms giant BT, which recently boosted its market share further with the emergency rescue takeover of TalkTalk. Virgin Media said at the time that the TalkTalk deal was a "stitch-up masked as a rescue deal in the public interest".
It is also facing competition scrutiny over plans by Nexfibre – a joint venture backed by Liberty Global and Telefonica, the co-owners of Virgin Media O2, as well as InfraVia Capital Partners – to buy alt-net Netomnia for £2billion. The Competition and Markets Authority has provisionally found concerns over the takeover, which Virgin Media O2's owners were hoping to secure to help it compete.
