Virgin Media O2 halts fiber upgrades and trims what O2 Business sells

Virgin Media O2 published its third-quarter results on 3 November, alongside an outline of a new strategic plan from chief executive Lutz Schüler. The headline measure is a cost program targeting annual run-rate savings of about £800m by 2029, with around £400m of that in 2027. Two other decisions in the same announcement reach further into the companies that buy from it: the operator will halt fiber upgrades on its own network beyond existing commitments to partners, and O2 Business will streamline its product portfolio.

In the quarter, total revenue fell 5.7% to £2.43bn on the company’s adjusted basis, and adjusted EBITDA fell 2.6% to £995.2m. Business revenue was down 3.7% at £298.9m, and business service revenue fell 5.3%, a decline the company puts down to “the planned streamlining of the B2B product portfolio and market headwinds”.

Schüler presented the plan as a break with habit, saying that “standing still and doing what we’ve always done is not an option”. He added that the decisions include the size of the workforce, and that it is “not something I take lightly”.

Virgin Media O2 has chosen to sell fewer things over the network it already has. For a mid-market buyer of connectivity, the next fixed upgrade in Virgin Media’s coaxial areas, beyond work already committed, is a faster coaxial service rather than new fiber, and the O2 Business catalog is under review at the same moment as the company shrinks the teams behind it.

Coax stays, the fiber build stops

The announcement is specific about the fixed network. Virgin Media O2 says it will halt investment in further fiber upgrades beyond its existing commitments to partners, on the grounds that market economics do not support three overlapping fiber networks. Its hybrid fiber-coaxial (HFC) network will instead get a low-cost upgrade that brings 2Gbps services to the majority of that network in 2027. Where future fiber investment makes strategic sense, the company says, it will be funded off the balance sheet and built only in areas without an alternative network operator.

The full fiber footprint stood at 9.4 million premises at the end of September, a figure that includes the network of nexfibre. That is the joint venture between Virgin Media O2’s two shareholders, Liberty Global and Telefónica, and InfraVia Capital Partners, which builds fiber in areas outside Virgin Media O2’s existing network. Virgin Media O2 is its anchor wholesale customer.

The company says it is also exploring wholesale arrangements to extend its services to areas that neither its own network nor nexfibre’s reaches, which it describes as “an incremental revenue opportunity”. It does not name a wholesale partner. For a business with sites outside the footprint, that would mean Virgin Media O2 service delivered over somebody else’s infrastructure.

A shorter catalog at O2 Business

O2 Business was formed on 1 August 2025 from Virgin Media O2’s direct business operations and those of Daisy Group, which owns 30% of the combined company. Its customers range from large enterprises to small and home offices. In its first year, the company says, O2 Business has made “significant integration progress”. The next phase is to streamline its product portfolio “to cut complexity and better suit the needs of businesses”, speed up commercial execution and margin expansion, and deliver about £70m a year of pre-tax savings from combining the two businesses by 2030.

The customer figures show the base shrinking while that work goes on. Business mobile contract connections stood at 2,917,000 at the end of September, down from 3,051,500 a year earlier, a fall of 4.4%. The net loss of 19,500 business connections in the quarter was less than half the 45,800 lost in the same quarter of 2025.

The announcement does not name the products that will go. So far the streamlining has shown up in the accounts as lower revenue rather than in published withdrawal notices. The full plan, covering the consumer, business and wholesale arms and the fixed and mobile networks, is due around the full-year results, which the company has scheduled for the first quarter of 2027.

Fewer people and more AI in service

About £300m of the 2029 saving is expected to come from a smaller workforce, which the company says equates to roughly 30% of its total people costs over the next two years. Most of the reduction is to come from roles that do not face customers, and the proposals are subject to consultation. Restructuring costs are put at about £250m, with payback within a year. Senior leadership roles have already been cut since the summer, and the commercial and operations functions now sit together under consumer chief executive Lyssa McGowan.

The company also plans to use fewer contractors, simplify its supplier relationships and supply chain, and review its technology licenses. In customer service it points to more AI and digital channels, building on its partnership with Sierra, and in the quarter it launched a voice AI agent to handle broadband fault calls.

Mobile keeps its budget

Mobile keeps its investment. Virgin Media O2 says its 5G+ network now covers 86% of the population outdoors, and that newly acquired spectrum will take its share to about 30%. Its network sharing arrangement with Vodafone continues, and its 2026 guidance for property and equipment additions of £2.0bn to £2.2bn is unchanged.

On the fixed side, a business on Virgin Media’s coaxial network in 2027 gets a faster connection rather than new fiber, an O2 Business catalog with fewer lines in it, and a supplier planning to take roughly 30% out of its people costs. The list of what O2 Business keeps and what it drops is due with the full-year results in the first quarter of 2027.