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July 25, 2023updated 26 Jul 2023 8:48am

Virgin Media O2’s 2,000 job cuts are latest blow to UK telecoms industry

The network operator becomes the latest telco to announce mass redundancies. Experts believe there could be more to come.

By Sophia Waterfield

Virgin Media O2 has become the latest telecommunications company to confirm workforce cuts, announcing that it will make 2,000 staff redundant. The news comes after large-scale layoffs were announced by Vodafone and BT. Industry experts fear cost-cutting exercises will continue as telcos struggle to generate revenue while splashing the cash on updating networks.

An image of the Virgin Media logo and the O2 logo on a smartphone.
The Virgin Media O2 job cuts are blamed on squeezed margins and the merger. (Photo via Shutterstock)

The cuts will be made before the end of the year. News that jobs could go was originally reported back in June, and confirmed today when the company released its latest earnings report.

Virgin Media O2 is one of the two largest mobile operators in the UK, and has some 47 million customers across its phone and broadband services. It was formed when Virgin Media merged with O2 in June 2021.

Virgin Media O2 job cuts part of ‘long-term strategy’

In its earnings update, CEO of Virgin Media O2 Lutz Schüler said that the company was navigating “a tough economic climate” and had a “clear long-term strategy” to deliver for its customers.

“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 second quarter revenue and EBITDA growth,” he said.

“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.”

Schüler said that the company would be focused on building commercial momentum for the rest of the year, realising the “synergies of the joint venture” and future-proofing its networks.

Cuts will be made in teams across the business, with staff being consulted on proposals to “simplify” Virgin Media O2’s operating model, leading to the cuts.

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Redundancies strike across the telecoms industry

The UK operator becomes the third telco in a matter of months to announce job cuts. As reported by Tech Monitor in May, BT said it planned to cut 55,000 jobs as well as replace staff with AI, as part of a plan to adopt a leaner way of working.

Vodafone was another telco to confirm workforce reductions, with 11,000 jobs to go over the next three years. Unlike BT, it said that the workforce cuts were in response to difficult market conditions, but did reference that it also needed a fresh approach to business.

The Communication Workers Union has responded to the news, with Tracey Fussey, assistant secretary, saying that a “tremendous deal of anxiety” has been created among its membership.

“The confirmation of job losses is a tremendous disappointment, and we will be doing everything we can to mitigate against the redundancies,” Fussey said. “The announcement of 2,000 redundancies includes changes already made this year. We will continue to actively work with [Virgin Media O2] through the consultation processes.”

She said that workers deserved “clarity and security” over their futures and that many were feeling vulnerable.

Expect more cost-cutting measures at Virgin Media O2

Paolo Pescatore, founder of PP Foresight, told Tech Monitor that the latest news of Virgin Media O2 job cuts was not good for the UK economy and that there could be more to come from the company as more adjustments are made as part of the merger process.

“There’s no way of dressing this up; it is not good news for UK plc and we can expect to see further cost-cutting measures across the industry,” Pescatore says. “Ultimately, it’s about efficiencies.”

He says that all the telecommunication companies were struggling to “generate new forms of revenue” and were feeling the squeeze on their margins due to the rollout of next-generation networks. “People are reluctant to spend more on connectivity,” he explains. Virgin Media O2 confirmed in its earnings update that it had upped its prices in its second quarter.

“For all providers, it’s an opportune moment to focus on efficiencies,” Pescatore continues. “This is only part of a successful long-term strategy. There should be a greater focus on driving revenues as well.”

Further cuts have come across the tech industry. As reported by Tech Monitor, IBM announced reductions to its back office workforce in May, saying it would replace vacant roles with AI.

“We are now starting to see [this trend in Big Tech] transcend into other verticals,” Pescatore says. “Telco is not immune and with significant technological developments around the corner, this will further fuel job cuts.”

He adds: “Should the Vodafone and Three deal get the green light, it is highly likely we will see a reduction in the combined workforce.”

Read more: Can UK telecoms innovation make it a leader in 5G?

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