Virgin Media O2 is launching a major restructuring programme targeting £800m in annual cost savings by 2029, alongside plans to halt further investment in its fibre upgrade programme and make greater use of artificial intelligence.

The telecoms operator expects to deliver £400m of annualised savings in 2027, rising to £600m in 2028. Around £300m will come from organisational restructuring, with the programme expected to incur one-off costs of approximately £250m and pay for itself within a year.

Thousands of jobs are expected to go as the company targets a simpler, lower-cost operating structure.

The strategic reset will also see Virgin Media O2 halt its fibre upgrade programme beyond existing commitments, instead opting for a cheaper "capex optimisation" approach to improving its existing hybrid fibre-coaxial (HFC) network. The company expects to deliver speeds of up to 2Gbps across most of the network during 2027.

"The fibre upgrade programme will be halted beyond existing commitments. A low cost upgrade will bring 2Gbps speeds to the majority of the HFC network in 2027," the company said under its results statement today.

Greater use of AI and digital channels will be central to improving efficiency and customer service. The company has already introduced an AI voice agent to handle broadband fault calls.

The overhaul comes against a difficult trading backdrop, with third-quarter service revenue falling 3.5% year on year and adjusted EBITDA declining 2.6% to £995.2m. Consumer fixed service revenue fell 6.4%, reflecting lower average revenue per user and intense competition in the broadband market.

Virgin Media O2 lost 23,300 fixed-line customers during the quarter, although this represented an improvement of 9,400 on the same period last year. Mobile contract net additions remained positive at 31,700, driven by wholesale growth.

The company reached 9.4m premises with full-fibre coverage, including the nexfibre network, while its 5G+ outdoor population coverage reached 86%.

Despite the challenging conditions, Virgin Media O2 reaffirmed its 2026 guidance, expecting service revenue and adjusted EBITDA declines of 3% to 5%, capital expenditure of £2bn to £2.2bn and adjusted free cash flow of around £200m.

The company is also reviewing its planned shareholder cash distributions for 2026, with an update expected alongside its full-year results in the first quarter of 2027, when the outcome of the Netomnia transaction will also be known.

---