Virgin Mobile’s planned job cuts of 2,000 people by the end of the year is just the start of further cost cutting measures across the industry.according to top telco analyst Paolo Pescatore.
Some people have already left the business. The number of redundancies includes some changes already announced internally. Some jobs are in consultation and some those people affected are due to be informed,
Lutz Schüler, CEO of Virgin Media O2 (Main pic) , said: “As we navigate a tough economic climate, we have a clear long-term strategy and continue to deliver for customers. Amidst higher costs, rising usage and continued investment, we executed necessary price increases in line with our expectations with this starting to flow through to our Q2 revenue and EBITDA growth. Demand for our award-winning connectivity remains, and our significant network investments and service improvements ensure we can meet all customer needs today while preparing for the decades ahead. For the rest of the year we remain focused on building commercial momentum, realising the synergies of the Joint Venture and future proofing our networks.
Q2 results painted a grim picture with a loss of 24,700 fixed-line customers due to customers having a right to cancel from price rise notifications
There was also a loss of of 15,300 broadband connections in Q2.. The mobile contract base fared better with a lslight lnet reduction of 1,500 in the quarter. O2 monthly consumer contract churn remained low at 0.9 per cent
“There’s no way of dressing this up”, said Pescatore.
“It is not good news for UK plc and we can expect to see further cost cutting measures across the industry. Ultimately it’s about efficiencies. All telcos are struggling to generate new forms of revenue. Margins continue to be squeezed due to rollout of next generation of networks and people are reluctant to spend more on connectivity.
“Furthermore, the entity is still going through the integration process of two companies coming together as one.
Unfortunately, it feels like job cuts are becoming the norm, akin to annual price rises.
“For all providers it’s an opportune moment to focus on efficiencies. This is only part of a successful long term strategy. There should be a greater focus on driving revenues as well.
“We’ve seen a correction in workforce across all sectors, most notably big tech. We are now starting to see this transcend into other verticals. Telco is not immune and with significant technological developments around the corner; this will further fuel job cuts.
“Should the Vodafone and Three deal get the green light, it is highly likely we will see a reduction in the combined workforce. It is an unfortunate consequence of a merger, joint venture.
A Virgin Media O2 statement said:
“As we continue to integrate and transform as a company, we are currently consulting on proposals to simplify our operating model to better deliver for customers, which will see a reduction in some roles this year. While we know any period of change can be difficult, we are committed to supporting all of our people and are working closely with the CWU and Prospect along with our internal employee representatives as we have open and honest conversations on the future direction of our business.”