Virgin Media O2 to cut thousands of jobs and slash costs

British telecoms group Virgin Media O2  said Tuesday that it would cut thousands of jobs in a sweeping cost-saving programme, helped by greater use of AI, to reduce its debt pile.

The telecoms group said it expected to save around £300 million ($400 million) in staff expenses, as part of a broader plan to slash costs by around £800 million a year by 2029.

The group, which employs 16,000 people, did not confirm how many jobs would be axed but said the number would be in the thousands.

"While many of these decisions are tough, they are necessary for our future success and growth," chief executive Lutz Schuler said in a statement.

"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 said.

Most of the job losses over the next two years will come from restructuring at its head office, including cuts to senior leadership roles, rather than positions that involve direct dealings with customers.

"The company also expects a greater use of AI tools and digital channels to drive efficiency, productivity and better customer experience," the group said, adding that it has launched a voice AI agent to handle broadband fault calls.

The group said it would give further updates on the restructuring plan with its annual earnings release in February.

Virgin Media O2 is under pressure from investors to slim its huge pile of debt, which totals more than £22 billion.

The job losses were announced alongside the group's third-quarter earnings, which saw revenue fall 5.7 percent from a year earlier to £2.4 billion.

While it returned to a net profit of £1.5 million in the July-September period, it also lost more than 23,000 customers across its internet and phone services.

To help save costs, the group is halting the roll-out of its fibre network upgrades beyond existing commitments.

It is also reviewing its use of contractors and suppliers.

"The result of these changes will be a leaner business that has fewer layers, greater focus, optimised investment and faster decision making," the group said.

It cited "a tough macroeconomic climate" and "an intensely competitive and shrinking broadband market" as reasons for the job cuts.

Spanish operator Telefonica and US group Liberty Global merged their UK units O2 and Virgin Media in 2021.

The group had already cut 2,000 jobs in 2023 following wider culls across the British telecoms sector.