Summary Bullets:
• Leading UK infrastructure-based telco service providers have announced up to 70,000 job cuts in the coming years, driven by efficiency initiatives and technology.
• Job losses are always regrettable, but improvements in service levels and the enablement of consumer and business innovations have been remarkable since BT’s privatization.
Virgin Media O2 has released its latest financial results, which include the elimination of 2,000 jobs (nearly 10% of its workforce of 18,700). This comes as the company has recently shed fixed and broadband lines due to the challenging UK economic situation.
When BT was first privatized in 1984, it employed 240,000 workers. BT recently announced up to 55,000 job losses (from a current total workforce of 130,000) as engineering works at Openreach see fiber rollout in the UK reaching completion. The reduction is also driven by lower maintenance needs than for legacy networks and increasing automation of network operations, including ongoing AI deployment.
Vodafone is looking to reduce its headcount globally by 11,000 (from a total employee base of 104,000) by 2026 in the face of increased competition and cost pressures. Cuts are less likely to impact the UK than other country operations as it is the one national market that shows positive momentum. If and when the merger with Three gets completed (unless regulators block the deal out of a misplaced addiction to the number of competitors rather than the competitiveness of the UK market), there are likely to be further synergistic job losses.
The combined UK workforce of Virgin Media O2, BT, and Vodafone is heading to a total of about 100,000 in coming years. The balance has shifted toward customer-facing roles and innovation, and away from engineering, with many thousands of jobs accounted for across a wide range of alternative service providers and resellers.
CityFibre, the other major fiber infrastructure player alongside Virgin Media O2 and BT/Openreach, has reported fiscal year (FY) 2022 underlying revenues of just GBP39 million and CapEx of GBP1.01 billion, indicating the long-term nature of return on investment in fiber networks. Interestingly, CityFibre has no staff directly employed as they “are employed and paid by group companies and recharged to the company.” The ultimate parent company, Connect Infrastructure Topco, uses companies like Kelly Group to deliver connections on the ground. Topco’s direct employees numbered 2,098 at end-2022, but as many as 400 roles may have been cut or will be cut from an earlier peak of 2,300.
The reason behind the job cuts is that all-fiber networks will need fewer people both to roll them out as penetration increases and to maintain them once installed. The telecoms employment base is set to be focused on software engineers and customer service agents (and bots), not on people in vans going up poles and down holes.
Since 1984, the market has also witnessed the emergence of mobile and the internet, delivered by ever faster fixed and mobile networks, as well as a wide range of value-added services across all customer segments as communications technologies have driven substantial economic and sociological changes.
Although every job that gets eliminated is regrettable, the fact is that the UK telecoms market is highly competitive, and levels of customer service have improved beyond recognition since BT’s privatization. There may be fewer employees, but in all other aspects, things have improved.