Cable Forum - Telefonica/Liberty Global seek to make cuts.

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Telefonica/Liberty Global seek to make cuts.

https://www.ft.com/content/795c4ff8-...syn-25a6b1a6=1

Quote:

Virgin Media O2 owners weigh options to slash £22bn debt pile
Dividend cuts, job losses and lower investment are among measures being considered by Telefónica and Liberty Global

Virgin Media O2 has become a focal point for investors
Virgin Media O2’s owners are weighing options to reduce the company’s £22bn debt pile after investor fears about the UK telecoms group’s finances accelerated a sell-off in its bonds.

Options for shareholders Telefónica and Liberty Global include cutting VMO2’s expected £200mn dividend this year, shedding jobs and reducing capital expenditure, according to two people

The price of VMO2’s roughly £1.1bn of senior unsecured debt has plummeted, with one $925mn bond falling as low as 57 cents on the dollar on Wednesday, having traded at about 78 cents at the start of July.

VMO2’s safer senior secured bonds have also fallen sharply, with the price of a $1.4bn note reaching 76 cents on the dollar, down from 92 cents at the beginning of the year.

The company has become a focal point for investors in Europe’s junk debt market, with one distressed credit investor describing VMO2 as “the talk of the town right now”.

Telefónica and Liberty Global have both publicly stated over the past week the need to cut VMO2’s debt as part of efforts to calm credit investors.

Bondholders have been spooked by the threat posed by the dozens of small fibre network operators, known as “altnets”, which raised more than £31bn to lure customers from VMO2 and BT-owned Openreach with cheap fibre broadband.

Virgin shed 33,500 broadband customers in the first half of 2026, on top of the 138,400 it lost last year. It had a customer base of 5.42mn at the end of June.

Liberty Global chief executive Mike Fries on Friday urged investors to remember that VMO2’s shareholders had “many tools” at their disposal “if necessary” to cut the company’s debt, boost operating performance and improve free cash flow — “both organic and inorganic”.

Telefónica chief financial officer Juan Azcue told analysts on Wednesday that it and Liberty Global were “committed to being proactive” in managing VMO2’s balance sheet and had “levers to pull to materially increase free cash flow and accelerate deleveraging”.

Investors are also concerned about the shareholders’ role in the £2bn acquisition of Netomnia, the UK’s fourth-largest broadband network.

Liberty Global and Telefónica are partnering with private equity firm InfraVia Capital to buy Netomnia through their joint venture Nexfibre.

Although Nexfibre is a separate company from VMO2, investors are worried the deal will squeeze its cash flow.

VMO2 will take a 15 per cent equity stake in Nexfibre as part of the transaction, receiving £1.1bn in cash in exchange for switching traffic from 4.6mn homes on to the company’s network.

However, it will have to pay fees to access Nexfibre’s infrastructure in future, sparking fears about its longer-term finances.

Liberty Global, Telefónica and VMO2 declined to comment.

The comments to this report appear to once again confirm that customer service remains abysmal.

Perhaps VMO2 should learn to focus on customer satisfaction rather than rinsing their customers with continuous price rises, poor mobile coverage and terrible customer service. It was a pleasure to leave after feeling ripped off for many years. While I appreciate other operators aren't much better there was a particularly cynical way Virgin did things over the last 5 years that I'm pleased to be rid of
I’m sure it’s not a top priority but it desperately needs a re-brand!

The *one* thing VMED had going for it was that it owned quasi-monopolistic infrastructure. Its service has been legendarily bad for 20 years.

(NB like many monopolies, VMED failed to invest sufficiently and anticipate how new entrants could get around, under and over its 'barriers to entry')
Cutting a 200m dividend as an option to “slash” a 22bn debt stack? I think there are other options on the table…
Virgin broadband is an utter joke. Their appalling customer service will surely begin biting hard very soon, if not already. Investors beware.
VMO2 is abysmally run
BT stopped paying dividends for 2 or 3 years to pay for investment and now they return to dividends and the share price has doubled.

After 10+ years with virgin I left for EE. Why? Because they wanted £69 a month for 1GB broadband, EE wanted £38. So I cancelled and booked in EE (openreach) to install and virgin called me after to offer me a £33 a month contract. I told them no thanks as they should have offered me the deal earlier not waited till I’d installed everything. EE then knocked it down to £33 on renewal without me having to call them up to get a better deal, something I always had to fight with virgin to get decent pricing. Virgin are going to run into serious trouble unless they price their products sensibly and genuinely try to retain customers recognising loyalty, it costs them to connect new lines so it’s better to retain the customers you have.

Re: Telefónica/Liberty Global seek to make cuts as they lose broadband customers.

Price was exactly why I left them as well, they wanted to charge me over £60 a month for BB, while offering it to "new" customers for about half that.

Zero reward for loyalty, and dreadful CS, its a wonder they only lost 33,500 in the first half of 2026.

Re: Telefónica/Liberty Global seek to make cuts as they lose broadband customers.

I'm still with VM, mainly because of the 'deal' they came up with after my last moan.

I was checking old VM bill emails earlier, oldest I have is from 2013 and it was £42 a month.
Fast forward to 2026 and I'm paying £51 a month.

I'm probably not the only one with a similar scenario.

For my bill to only rise £9 over 13 years, VM are either making a shed load of money somewhere else, or are quite happy to run with mounting debt just to retain customers . . which, to me, isn't going to last.

Re: Telefónica/Liberty Global seek to make cuts as they lose broadband customers.

Quote:

Originally Posted by Carth (Post 36220478)

Carth, did you call up at the end of your contract minimum term and negotiate a ‘better’ deal? Did you threaten to leave?

Historically VM’s modus operandi has been to lure new customers in with cheap offers and then rely on the majority not wanting to go through the pain of threatening to leave, find another supplier and then actually cancel - because that tends to be the only way of getting a cheaper price.

---------- Post added at 20:26 ---------- Previous post was at 20:11 ----------

Quote:

Originally Posted by Paul (Post 36220477)

It’s something I used to state on the now defunct (never to return) VM community forums. What you see as ‘loyalty’, they see as ‘mug’.

There is no such thing as loyalty to a brand or supplier, a person may stay with a supplier because the service is good and the price is acceptable - but what when it isn’t?

VM’s model was always to get new customers at a low price - it has long been assumed that VM made a financial loss on new customer pricing, but relied on them not being inclined or bothered to leave or renegotiate when the minimum term was up and the price increased enormously.

Their legendary CS provision? Yes widely regarded as being the worse in the industry - only recently did they admit, that 'yes, our outsourced call centre staff were actually incentivised to put the phone down on people trying to leave’, but the point is, it’s all outsourced - nothing to do with us guv! The one bright spot in the stygian gloom of VM’s excuse for a customer service provision were the community forums - so obviously they had to go!

Re: Telefónica/Liberty Global seek to make cuts as they lose broadband customers.

Virgin o2 will take a 15 per cent equity stake in Nexfibre as part of the transaction, receiving £1.1bn in cash in exchange for switching traffic from 4.6mn homes on to the company’s network.

Ok what will that mean for customers?

Bonds
Telecoms
UK companies
Corporate bonds
Virgin Media O2