TalkTalk to cut hundreds of jobs as broadband provider targets £120m of cost cuts

TalkTalk is set to cut hundreds of jobs in a major £120m cost-cutting drive, as the struggling broadband provider embarks on a restructuring plan to restore its financial health.

In an update to investors last week, the company confirmed a “major” restructuring, with the first layoffs already being discussed. Around 130 jobs are expected to go at its Salford-based consumer division, while other cuts at its larger arm – known internally as Platform X – are expected to bring job losses to hundreds.

The cuts are expected to be mainly in head office roles after TalkTalk agreed to cut operating costs across many business units and divisions. The company reported 1,857 employees in February, two-thirds of whom were in management roles.

The redundancies are part of a wider cost-cutting agenda targeting more than £120m in savings, around 60% of which TalkTalk aims to achieve within the next 12 months. Along with the job losses, the cost-cutting plan is expected to include the sale of non-essential businesses, office closures, and tighter controls on marketing, tourism and food budgets.

Additionally, TalkTalk plans to automate more tasks, increase its use of artificial intelligence, and consider outsourcing and offshore options to streamline operations.

The moves come after TalkTalk narrowly avoided collapse this summer, as founder Sir Charles Dunstone and other major shareholders came together to provide a vital cash injection, preventing a debt default. Despite emergency support, TalkTalk remains heavily indebted, with a £1.2bn burden generating huge servicing costs. Losses widened to £72m in the six months to the end of August, while the customer base fell from 3.6m in February to 3.4m at the end of August.

James Ratzer, an analyst at New Street Research, expressed doubts about the long-term sustainability of TalkTalk’s business model under current credit conditions. Although he sees a way back to generating around £70m in free cash flow if the cuts are realised, this will no longer be enough to cover existing interest obligations.

In an effort to raise funds, TalkTalk last year dissolved its business and has since sought to acquire the entire group or parts of it. Talks with Australian investor Macquarie about a potential £500m investment in Platform X failed to deliver a deal earlier this year.

A TalkTalk spokesperson said: “This is the first phase of a multi-year transformation of our business to deliver a differentiated service and product to our customers. We are simplifying our business to ensure we can continue to provide great value connectivity to millions of UK customers. As part of this, we have made the difficult decision to launch a consultation on the future of other roles in TalkTalk’s consumer business.”