Talktalk to axe hundreds of jobs in latest cost-cutting drive
Talktalk is set to cut hundreds of jobs as it looks to boost its balance sheet after narrowly avoiding collapse earlier this year.
The telecoms giant, which had 1,857 employees at the end of February, outlined plans to cut the roles in the “radical” restructuring in an update last week, according to The Telegraph.
The company has already begun redundancies at its Salford-based consumer divisions, with more expected to follow at a wholesale business, The Telegraph said.
Talktalk has been struggling with a mountain of debt since its founder Sir Charles Dunstone and investment fund Toscafund took the company off the stock exchange and into private ownership.
That debt got much more expensive in the wake of interest rate hikes after the Russia-Ukraine war, and the firm narrowly avoided collapse earlier this year.
This cost, plus a continued fall in customer numbers – it lost 334,000 in the year to March – has put the company in a tricky position. Its latest accounts showed losses rose sharply to £72m in the six months to the end of August.
“The company has struggled in a tough operating environment,” Paolo Pescatore, a telecoms analyst and founder of PP Foresight told Morning Wire earlier this year. “Rivals have stepped up efforts, and we’ve seen some come together in the form of corporate activity given the importance of scale. At the same time, Talktalk has gone backwards.”
The job losses are part of a wider cost-cutting programme which includes a pivot towards the use of AI, as well as outsourcing and offshoring.
James Ratzer, an analyst at New Street Research, told The Telegraph: “We struggle to see long-term viability of the business model with the current debt structure.
“If the cost cutting targets can be delivered, we see a path back towards generating around £70m of operating free cashflow, but this remains well below the sustainable interest payments that are currently due on the bonds.”
A TalkTalk Consumer spokesperson said: “This is the first stage in a multi-year transformation of our business to deliver differentiated service and product to our customers.
“We are simplifying our business to ensure that we can continue to offer great value connectivity to our millions of customers across the UK.
“As part of this, we have made the difficult decision to launch a consultation about the future of some roles at TalkTalk’s consumer business.”