Virgin Media O2 is expected to announce that it is cutting up to 4,000 jobs, around a quarter of its 16,000-strong workforce, under a major restructuring aimed at reducing costs and tackling its £22bn debt pile.

The UK telecoms operator, jointly owned by Liberty Global and Telefónica, is expected to unveil a transformation programme alongside its third-quarter results on 3 November, following pressure from investors over its ability to service its borrowings.

Virgin Media O2 was hit by a selloff in its bonds over the summer as investors grew concerned that price competition from small fibre network operators, known as altnets, was affecting the company's ability to service its £22bn debt pile.

The proposed cuts are expected to focus primarily on back-office and non-customer-facing roles, alongside a review of its use of external contractors and suppliers. Trade unions, including the Communication Workers Union and Prospect, have reportedly been briefed on the plans.

Virgin Media and O2 merged in June 2021, creating Virgin Media O2, a 50:50 joint venture between Liberty Global (owner of Virgin Media) and Telefónica (owner of O2). VMO2 was expected to list on the London Stock Exchange (LSE), which never happened. Since the merger, its bond pries have plummeted while Liberty's shares have fallen by a third in six months - the stock recently closed around $7.77, compared with levels in the high teens to low $20s during parts of 2021.

The restructuring could also involve a significant change to Virgin Media O2's broadband investment strategy. Rather than continuing its capital-intensive fibre-to-the-premises rollout, the company is considering using wholesale access to BT's Openreach network it was reported over the weekend.

The move follows mounting competition from alternative network operators, with Virgin Media O2 losing more than 170,000 broadband customers in the 18 months leading up to mid-2026. An attempted £2bn acquisition of rival fibre operator Netomnia through infrastructure arm Nexfibre was also abandoned following regulatory intervention by the Competition and Markets Authority.

Lutz Schüler, the CEO of Virgin Media O2, has been one of the most vocal critics of BT's acquisition of TalkTalk in recent weeks. He repeatedly described the transaction as a "backroom deal" and argued that it was being rushed through without the level of regulatory scrutiny that other telecoms mergers have faced.

VMO2, which generates around £10bn in annual revenues, has faced rising financing but also competition from altnets and pressure on customer revenues have added to its challenges. It was also fined £28m by Ofcom earlier his year for suspected customer services mishandling.

On Friday, BT Group shares were 6.7% higher at 227.20p following a report that Virgin Media O2 is closing in on a deal to use its broadband network. Under the proposed deal, VMO2 would rely on BT's Openreach network to host new customers in areas that are not covered by its existing network.

---