Virgin Media O2 owners target £600mn in cost cuts
Telefónica and Liberty Global seek job cuts and other reductions in a bid to calm bond investors
Virgin Media O2’s shareholders are targeting around £600mn in cost cuts at the heavily indebted telecoms group in a bid to calm investor concerns about the sustainability of the company’s debt pile.
Liberty Global and Telefónica are proposing asking the UK telecoms group to find the reductions through a mixture of job cuts and reductions in operating and capital expenditure, according to two people familiar with the matter.
The move comes after the company was rocked by a sell-off in its bonds over the summer, with investors worried about its ability to service a £22bn debt pile amid an influx of competition from dozens of small fibre network operators, known as “altnets”.
The sell-off put pressure on the price of VMO2’s roughly £1.1bn of senior unsecured debt, pushing the price of a $925mn bond down to 61 cents on the dollar on Thursday. The bond was trading at about 78 cents at the start of July.
Some of VMO2’s safer senior secured bonds have also fallen below 80 cents on the dollar in recent months, having traded at 92 cents at the beginning of the year. The price drop turned VMO2 into a focal point for investors in Europe’s junk debt market.
The FT reported in July that the company’s two owners were weighing options to reduce the company’s debt, with a cut to its £200mn dividend also on the table. A person with knowledge of the matter said no formal proposal had yet been put to VMO2.
VMO2, which serves millions of UK customers with broadband and mobile services, has suffered heavily as a proliferation of “altnets” have raised £31bn to lure customers from VMO2 and BT-owned Openreach with cheap fibre broadband.
Virgin shed 33,500 broadband customers in the first half of 2026, on top of the 138,400 it lost last year. It had a customer base of 5.42mn at the end of June.
Telefónica and VMO2 declined to comment, Liberty Global did not respond to requests for comment.