Virgin Media O2 has confirmed plans to slash thousands of jobs in the UK under a push to cut its cost base by around £800m, as it grapples with firmer competition and “paradoxical” regulation in the fibre market.

The telecoms giant said around £300m of the total savings would come from cutting its 16,000-strong workforce in the UK, with aims to reduce its staff costs by around 30 per cent by 2029.

The company has not disclosed how many jobs in total will be lost.

The cuts form part of a wider cost-saving drive as Virgin Media O2 seeks to simplify its management structure and reduce spending on contractors and suppliers.

Erhan Gurses, telecoms analyst at Bloomberg Intelligence, estimated that the redundancies could generate around £200m in annual gross personnel savings by 2028, with further reductions in contractor spending potentially increasing that figure.

However, he warned that the savings would do little to resolve the company’s balance-sheet pressures, with net leverage potentially remaining close to 5.5 times earnings in 2028, above its target range of four to five times.

“The scale and timing show the cost-saving push has accelerated notably”, Gurses said.

Revenue falls as broadband market shrinks

The restructuring comes as Virgin Media O2 faces pressure from tighter fibre regulation, competition from cheaper broadband rivals and a shrinking market.

In its third-quarter results, the company said service revenue fell 3.5 per cent in the three months to the end of September, with another 23,300 fixed line customer losses on a net basis. It said this was 9,400 fewer than a year earlier.

Overall underlying earnings fell 2.6 per cent in the third quarter as a 5.4 per cent drop in costs failed to offset the service revenue hit.

In a statement, the company said senior leadership changes were “already underway” as part of plans to reduce its “organisational layers”.

“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,” said Lutz Schuler, chief executive Virgin Media O2.

The company said it had no plans to close any of its UK offices, including sites in London, Reading, Leeds, Manchester and Glasgow.

The company added that the decision came against comes against a backdrop of “a tough macro-economic climate, an intensely competitive and shrinking broadband market and a paradoxical regulatory direction in fibre that does not reflect economic reality”.

Virgin Media O2 said it had no plans to close any of its UK offices, which include sites in Paddington in London, Reading, Leeds, Manchester and Glasgow.

Fibre competition adds pressure

Virgin Media O2, jointly owned by Liberty Global and Telefónica, has also been reviewing its fibre investment strategy as competition intensifies.

The company is understood to be nearing an agreement to use BT’s Openreach network, potentially allowing it to expand coverage without shouldering the full cost of building new infrastructure.

The talks come despite tensions between the two operators, with Virgin Media O2 recently describing BT’s agreed takeover of TalkTalk as a “stitch-up”.

Meanwhile, the Competition and Markets Authority has provisionally raised concerns over nexfibre’s proposed £2bn acquisition of Netomnia. Nexfibre is backed by Virgin Media O2’s shareholders.

The regulator is expected to issue its final decision in December.

Virgin Media O2 said its restructuring reflected a “tough macro-economic climate, an intensely competitive and shrinking broadband market” and a regulatory approach to fibre that it argued failed to reflect economic realities.