- The UK’s major telcos are planning futures with far fewer employees
- BT and Vodafone have already announced major headcount reductions
- Now Virgin Media O2 is set to cut hundreds of jobs this summer
- The move comes in the wake of major price increases and service issues
Virgin Media O2 (VMO2) is adding to the job cuts tally of the UK’s major telecom network operators with plans to make at least 800 staff, about 5% of the company’s workforce, redundant this summer, according to reports.
The Communication Workers Union (CWU) had warned in February that up to 1,400 VMO2 jobs were at risk due to site rationalisation and restructuring processes, and news that VMO2 staff had been sent redundancy notices emerged last week: The headcount reduction plan was confirmed by the operator, though the numbers of employees affected was not shared.
Over the weekend, though, reports emerged that at least 800 VMO2 staff are due to lose their jobs before the end of July: In a prime example of what might very charitably be described as ‘corporate sophistry writ large’, the company is set to implement staff salary increases from 1 August, the day after all of the current planned job cuts are set to have been implemented, so ensuring that redundancy payments are not based on increased salary terms.
News of VMO2’s planned job cuts adds to the announcements made in recent months by the UK operator’s major rivals. In May, BT announced a plan to reduce its workforce by about 42%, or 55,000 roles, by the end of this decade, as major network rollout projects come to an end and the impact of AI-enabled automation takes its toll on operations; and weeks earlier, Vodafone Group said it would cut 11,000 roles, more than 10% of its workforce, across Europe over the next three years. It’s hard to imagine that more jobs won’t be lost if Vodafone UK and Three are given regulatory clearance for their planned £16.5bn merger.
News of VMO2’s job cut plans also comes in the wake of major price increases and service delivery issues that have not endeared the service provider to its sizeable customer base.
VMO2 was formed in June 2021 when cable network operator Virgin Media merged with mobile operator O2 to form a more formidable competitor to BT (including its mobile division EE) and Vodafone. VMO2 is jointly owned by the former parent companies of the merged entities, international cable operator Liberty Global and Spanish telco giant Telefónica.
For the first quarter of 2023, the operator reported revenues of £2.6bn, an increase of 3.9% year on year, and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of £950.4m, up 2%. It ended March 2023 with almost 24 million mobile customers (not including wholesale or internet of things connections) and almost 5.7 million broadband customers.
And during that quarter, amid a cost-of-living crisis in the UK, VMO2 decided to not only increase its prices to cover its own costs, but to raise its mobile contract rates by 17.3% from 1 April and its broadband/TV/fixed line rates by 13.8%, way above the rate of inflation at the time, and then had the temerity to accuse its rivals of swindling their customers by charging fees for devices that have already been paid off.
And it’s not just the size of the increases that are affecting and irking customers, it’s the timing: VMO2 enthusiastically applies the latest, widespread industry sharp-practice of increasing prices halfway through a contract. It’s legal, but the provisions are buried in contract small print that, as we all know, is most often not read – it’s just plain sneaky.
Pressure is being put on Ofcom, the dozy and toothless UK telecoms regulator, more somnolent than ever in another hot English summer, to limit contract terms to 12 months so that customers are not caught out with massive price hikes in the middle of a 24-month deal. For historical reasons, VMO2 subscribers have, this year anyway, been able to avail themselves of Ofcom’s mid-contract rules that allows them to leave the company penalty-free (within 30 days of receiving notification of a price increase), but next year and thereafter that ‘benefit’ will no longer apply.
All of this comes at a time when VMO2 is recording very poor customer satisfaction ratings, as measured by Ofcom, for its mobile and broadband services – the charts in this first quarter of 2023 customer service comparison report are shocking for a major national operator, and embarrassing at a time when it has hiked its prices up by so much.
As if that wasn’t bad enough, VMO2 last week suffered a lengthy email service outage, lasting up to five days for some users. The operator says things are now back to normal, but they’re not: Historical emails are still lost in the ether.
Since the late 1990s and the dim and distant days of Blueyonder and NTL, Virgin has run an email service that covers accounts ending @virginmedia.com, @virgin.net, @ntlworld.com and @blueyonder.co.uk. They have been run separately, but sort of in tandem, for years and have been something of a burden for the operator – so much so, in fact, that VMO2 no longer offers an email service to new subscribers. One would have thought the disparate systems would have been an ideal candidate for a major rationalisation and integration exercise but, it seems, the prospect of tackling such a task was never deemed important enough.
When the VMO2 email went down, the UK tech journalist grapevine was buzzing with rumours that the company had either been hacked or a major hardware or software fault had resulted in the loss of access to all emails. In response to a query by TelecomTV, VMO2’s press office “firmly denied” rumours of a security breach, stating, “There is absolutely no suggestion of any ‘hack’ or that any accounts or personal details have been compromised. Secondly, emails have not been ‘irretrievably lost’ – a small proportion of the impacted users aren’t currently able to see historic emails… We have now restored the ability to send and receive emails for all affected accounts. Our teams are continuing to work flat out to restore historic emails into the inboxes of a small proportion of accounts.”
As far as paying some sort of compensation for several days of lost service and archived emails, the statement adds, “It’s also worth noting that our email service is a free service.”
Many subscribers affected by the prolonged outage complained that information supplied by VMO2 was slow to be offered, partial, and difficult to find. Apart from blaming the outage on an unspecified “hardware problem”, no other explanation of how or why VMO2’s email services went down has yet been offered.
- Martyn Warwick, Editor in Chief, TelecomTV