Telefónica and Liberty Global, 50% shareholders of Virgin Media O2 (VMO2), are considering demanding from their British subsidiary a new adjustment plan with which they aim to cut around 600 million pounds (about 699.2 million euros). According to Financial Times, the program would focus on job cuts and a significant reduction in both operating expenses and capital investments.
The objective of this roadmap would be to respond to investors' concerns about the operator's ability to manage its debt, which amounts to 22 billion pounds (around 25.637 billion euros).
The internal debate arises after the sharp declines recorded by VMO2's bonds during the summer. An unsecured senior bond of 925 million dollars (out of a total of 1.1 billion pounds of this type of debt) has started to pay at 61 cents on the dollar, compared to the 78 cents it was trading at the beginning of July.
In parallel, part of the secured senior debt has also deteriorated in the secondary market, sinking below 80 cents on the dollar, after having traded at 92 cents at the beginning of the year.
PRESSURE FROM "ALTNETS" AND DIVIDEND ANALYSIS
Among the measures that the two parent companies are considering is also the possibility of cutting the dividend they receive from the company by 200 million euros, although sources consulted by the newspaper specify that no formal proposal has yet been submitted to VMO2's board of directors.
This financial rethinking coincides with a notable increase in competitive pressure from numerous alternative fiber networks, known as altnets. These operators have managed to raise 31 billion euros to finance their deployment and are taking customers from both VMO2 and Openreach (BT) through low-cost tariffs.
In this scenario, the operator's broadband customer base in the UK stood at 5.42 million lines at the end of June, after recording a loss of 33,500 subscribers in the first half of the year, which adds to the 138,400 users who left the company during the previous year.
When asked by Europa Press about this information, Telefónica has chosen not to make any comments.