Virgin Media to cut 2,200 workers in next four years

Staff cull described as 'critical' to complete restructuring after mergers.

Virgin Media is set to cull 15 per cent of its workforce over the next four years, in a restructuring drive it describes as "critical" to boost efficiency and profits at the group in the face of declining economic conditions.

The UK cable operator announced yesterday that it was to slash about 2,200 employees from its 14,600-strong team by 2012, following a review of the entire business. The overhaul is expected to boost cash flow by about £120m a year from 2012.

Virgin Media, whose second-largest shareholder is Sir Richard Branson, said in a statement that it planned "a restructuring of its operations aimed at driving further improvements in its operational performance" as well as to better provide customers with value for money.

So far, the company has not finalised details of which departments will be affected and where from its 76 locations across the UK the job will come. A spokesman said that, following internal consultation, the group will cut the majority of jobs between September next year and the end of 2010.

Virgin's chief executive, Neil Berkett, who presented the plan to analysts in the US where the group is listed, said yesterday: "These changes are critical to ensuring Virgin Media is positioned to compete effectively and deliver on our customers' changing expectations. Over the coming weeks and months, we will be developing more detailed proposals for their implementation."

The company launched an intensive review earlier this year on how to fully integrate the company that has been created through a series of mergers.

Virgin Media was built through the merger of NTL and Telewest in 2006 and the subsequent takeover of Virgin Mobile the same year. The initial deal saw NTL announce that it would cut its workforce by 6,000 in the wake of the merger, sparking outrage from unions.

The group operates fibre-optic broadband, which one analyst referred to as its "killer business", television, mobile phone and fixed-line services. "This will be about changing the shape of the business. There are strategic issues facing the company," the analyst added.

This year's review aimed to set out the blueprints for integrating the company fully so it "is capable of competing effectively for the long term". The spokesman added that the review was not a "knee-jerk reaction to the economic climate."

The news comes just a week after the group admitted it had to ask its bankers to delay the repayment of part of its debt from this year's deadline to 2012. However, its third-quarter results announced the same day showed grounds for optimism. Mr Berkett said: "In the face of a slowdown, our business has shown good resilience." It announced revenues had declined less than feared from just over £1bn a year earlier to £991m and it had added 8,200 new customers.

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