Virgin Media O2 to Cut 30% of People Costs and Halt Fibre Upgrades in an £800 Million Reset

Virgin Media O2 said on Tuesday it will cut about 30 percent of its people costs under a plan targeting 800 million pounds in annual savings by 2029.

Virgin Media O2 is the British mobile and broadband operator formed by merging Virgin Media with O2. It is owned by Liberty Global and Telefónica. Reuters reported that it employs 15,000 people.

The company announced the savings plan alongside third-quarter results on Tuesday, November 3. A run-rate saving is the full annual saving once every measure is in place. The plan will be detailed in full around the full-year results.

The reset in detail

About 400 million pounds of the savings are expected in 2027. Roughly 300 million pounds of the 2029 saving will come from a smaller workforce. That equals about 30 percent of total people costs over the next two years.

Most of the workforce reduction will fall on non-customer-facing roles. The company gave no headcount target. Senior leadership roles have already been cut since the summer, it said.

Commercial and operations work has been combined under Consumer chief Lyssa McGowan. Wider proposals are subject to consultation, and unions will keep being briefed. Other measures cut contractors, simplify supplier deals and review technology licenses.

Artificial intelligence and digital tools will take a bigger role in customer service and network work. The company pointed to its partnership with Sierra. In business services, O2 Business targets about 70 million pounds in pre-tax annual run-rate synergies by 2030.

“Standing still and doing what we’ve always done is not an option,” chief executive Lutz Schüler said. He said the company was already making difficult decisions to prioritize investment and reduce costs, including workforce size.

The network pivot: cheaper cable over new fibre

The company will halt investment in further fibre upgrades beyond existing partner commitments. Fibre here means fiber-optic lines run all the way into homes. It argues market economics do not support three overlapping fibre networks.

Instead, it will upgrade its hybrid fibre-coaxial network at lower cost. That network runs fibre to the street, then coaxial cable into homes. The upgrade should bring speeds of 2 gigabits per second to most of the network in 2027.

Any future fibre building will sit off the balance sheet. It will happen only in areas without alternative fibre networks, called alt-nets. The company is also exploring wholesale deals to sell services in areas its own networks do not reach.

The company did not identify any wholesale partner or announce an agreement. Reuters reported separately that it is in talks about using BT's Openreach network. That identification is Reuters reporting, not a company confirmation.

Mobile investment continues under the plan. It covers 5G+, the next mobile generation, plus O2 Satellite and newly acquired spectrum. The spectrum additions take its share to about 30 percent, the company said.

The pivot also lands on a blocked expansion deal. Virgin Media O2 had planned wider fibre growth through nexfibre's purchase of Netomnia. Britain's competition regulator opposed that purchase last month, Reuters reported.

Nexfibre is a joint venture between the company's owners and InfraVia. Reuters reported it plans to challenge the regulator's reasoning. BroadbandTVNews said the company expects the Netomnia outcome to be known by the full-year results.

Third-quarter results stayed under pressure

Third-quarter revenue fell 5.7 percent to 2.4 billion pounds. Service revenue fell 3.5 percent to 2 billion pounds. Adjusted EBITDA, a company core-earnings measure, fell 2.6 percent to 995 million pounds.

The comparisons are adjusted for the Daisy transaction, a business-services deal. The consumer fixed-line base fell by 23,300 customers to 5.5 million. Those losses improved by 9,400 against the same quarter a year earlier.

Consumer fixed average revenue per user fell 5 percent to 45.83 pounds. PA reported the company blamed competitive intensity and the phasing of annual price rises. Trading remained tough, the company said.

Mobile told two stories at once. Total mobile contract connections rose by 31,700 to 24.4 million, driven by wholesale growth. Consumer mobile contract connections fell by 7,800, an improvement on the second quarter.

Consumer contract average revenue per user rose 2 percent. The fixed network can serve 18.8 million premises. Full fibre reaches 9.4 million of them, half the footprint, and every home passed can get at least 1 gigabit speeds.

Its 5G Standalone network reaches 86 percent of the outdoor population. Standalone means the network runs on dedicated 5G infrastructure. None of these figures is a market forecast; they are reported third-quarter results.

Debt and guidance frame the reset

PA reported the group carries a debt mountain of more than 22 billion pounds. That burden is the backdrop to the savings plan. The company said shareholders Liberty Global and Telefónica back the new direction.

It also noted more than 10 billion pounds invested in Britain in the merger's first five years. For 2026, guidance was reconfirmed, not raised. Service revenue and adjusted EBITDA are both expected to fall 3 percent to 5 percent, Daisy-adjusted.

Investment is expected at 2 billion to 2.2 billion pounds. Adjusted free cash flow is expected at about 200 million pounds. Planned cash distributions to shareholders are under review, with an update due at the full-year results.

What remains unknown

What remains unknown starts with the jobs themselves. The company has not said how many roles will go, or which sites and teams bear the cuts. It has no plans to close its British offices, PA reported.

The wholesale exploration is also unresolved. No partner, terms or timetable has been announced by the company. Whether the Netomnia purchase proceeds is equally open, pending the regulatory challenge.

What to watch next

What to watch next is the full-year results in February. The company will present the full strategic plan then. It also expects the Netomnia outcome to be known by that point.

PA reported most affected workers will be told by February. Watch, too, for the shareholder distributions decision. And watch whether the cheaper cable upgrade holds customers who can now choose rival fibre networks.