Virgin Media O2 targets £800m savings and 30% cut to people costs

Virgin Media O2 will cut roughly 30 per cent of its total people costs over the next two years as part of a plan to deliver approximately £800 million (€715.5 million) in annual run-rate cost savings by 2029, with around £400 million landing in 2027 alone.

CEO Lutz Schüler set out the direction in a strategy announcement that confirmed reports of major job losses ahead. Approximately £300 million of the 2029 run-rate saving will come from workforce reduction, with the majority taken from non-customer-facing roles. Senior leadership has already thinned since the summer, including Executive Committee changes and the merger of the commercial and operations units under Consumer CEO Lyssa McGowan. Further reductions across the wider business remain subject to consultation, with union representatives briefed as plans develop.

The announcement landed alongside weak Q3 numbers. Revenue fell 5.7 per cent to £2.4 billion, service revenue dropped 3.5 per cent to £2 billion and adjusted EBITDA declined 2.6 per cent to £995 million, adjusted for the Daisy transaction. Consumer fixed-line customers fell by 23,300 to 5.5 million. Mobile contract connections rose 31,700 to 24.4 million, though consumer mobile contract connections slipped 7,800; consumer contract ARPU grew 2 per cent.

What does the plan change for each business line?

The strategy spans consumer, B2B, wholesale and both fixed and mobile networks, built on three priorities: customers first, fewer and larger investment bets, and a leaner organisation. Financially, that means operating free cash flow generation, margin improvement and lower leverage.

• Consumer: a more clearly defined market role for each brand, each under a dedicated commercial leader; a simplified product line-up; fixes for core customer pain points; and better loyalty rewards to hold value and cut churn.
• B2B: O2 Business, one year into integration, will streamline its portfolio, speed commercial execution and expand margins, targeting ~£70 million in pre-tax annual run-rate synergies by 2030.
• Wholesale: the company will defend its position as the leading MVNO network of choice and keep offering fixed wholesale across the Virgin Media O2 and nexfibre footprints from a single platform.

Why is Virgin Media O2 stopping fibre investment?

The sharpest strategic break is on fixed infrastructure. Virgin Media O2 will halt investment in fibre upgrades beyond existing commitments to partners. The company said market economics do not support three overlapping fibre networks. Its HFC network will carry on delivering broadband at scale, with a low-cost upgrade bringing 2Gbps services to the majority of the network in 2027.

Any future fibre investment will be off-balance sheet and restricted to non-altnet areas. The operator is also exploring wholesale arrangements to extend services into off-net areas beyond its own and nexfibre's reach, which it frames as incremental revenue and future flexibility.

Mobile investment continues, focused on reliability and connection quality: further 5G+ expansion, O2 Satellite, AI tools, the network-sharing arrangement with Vodafone, and deployment of acquired spectrum that lifts the company's share to roughly 30 per cent.

Beyond headcount, cost measures include fewer contractors, simplified supplier relationships and supply chain, and a review of technology licences. AI and digital channels will push efficiency across customer service — building on the recently announced Sierra partnership — plus network planning, fault management and personalised commercial offers.

Schüler 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." He added: "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, and for those staying we will work differently, but as one team, to get back to winning again."

The fibre regulatory backdrop Schüler cited has squeezed returns for operators competing against altnet overbuild, and the decision to lean on HFC rather than fund a third fibre network marks a clear divergence from rivals' full-fibre pushes. A fuller update on the strategic plan is promised in the coming months.