Shareholders of Virgin Media O2 UK reportedly target £600m in cost cuts

The owners of UK broadband, mobile and TV provider Virgin Media (O2), Telefónica and Liberty Global, are reportedly set to move forward with earlier proposals for a significant round of cost-cutting (i.e. a mix of job cuts and reducing capital expenditure) and are reportedly aiming to calm investors by cutting c.£600m.

As we reported in July 2026, the situation was partly triggered after the price of Virgin Media and O2’s c.£1.1bn of senior unsecured debt plummeted (at the time one $925mn bond fell as low as 57 cents on the dollar), which had also coincided with softer earnings (i.e. customer losses to rival networks) and the £2bn deal – supported by InfraVia Capital – to buy full fibre broadband altnet Netomnia, which squeezed free cash flow. The latter deal is currently going through a fast-tracked competition review (here).

In short, investors were growing increasingly concerned about VMO2’s ability to service its £22bn debt mountain, which inevitably ends up increase the risk associated with such debts (i.e. issuing new bonds and refinancing existing debt becomes more expensive and difficult). Reports at the time indicated that even VMO2’s safer senior secured bonds had also “fallen sharply”.

According to a new FT report (paywall), Liberty Global and Telefónica are allegedly preparing to present a proposal that would require Virgin Media and O2 to find around £600m in cost cuts across the business, which seems likely to result in a round of job cuts and a reduction in capital expenditure. The latter could be particularly tricky as VMO2 currently needs to invest in order to keep its network and services competitive, as well as to potentially fund further altnet acquisitions.

The previous report also indicated that VMO2 might need to cut its £200m dividend, although it’s unclear if that is still on the table. At present a formal proposal has yet to be put to VMO2, although this is expected to follow soon. None of the parties involved agreed to comment, although the CEO of Liberty Global did previously acknowledge the situation:

Michael Fries, Liberty Global CEO, said in July:

“Finally, just a word on our capital structure in the UK … The most important message I want you to hear from me is that both Liberty and Telefónica are completely aligned on our commitment to this business long term. While we appreciate that leverage today exceeds our original targets and as a result of slower growth in our decision to reinvest more in our networks, I would urge you to remember that we have many tools at our disposal if necessary, both organic and inorganic to drive greater free cash flow, stronger operating performance and lower leverage over time.”