O2 Telefónica Deutschland cuts almost one in six jobs and closes 60 shops

Background: Loss of major customer 1&1

According to industry sources, the loss of the largest corporate customer triggered the savings measures. The mobile provider 1&1 (United Internet) had been a tenant in O2's network for years and paid rent for it. In the meantime, 1&1 operates its own mobile network and has its roughly twelve million mobile customers roam on Vodafone outside its own network coverage. The loss of this major customer meant significantly less money in the till for O2, according to the company.

The costs of the „operativen und strategischen Neuausrichtung“ are said to amount to 265 million euros according to the statement. Of this, provisions of up to 155 million euros are to be created next year, according to the information. Once both phases of the cost reductions have been implemented, the company wants to reduce its annual costs by around 185 million euros from 2028 onwards.

Impact on stores and workforce

In addition to the job cuts, 60 of the roughly 800 O2 shops are to close by the end of the year. Only company-owned locations are affected, not the branches of franchise partners. At the same time, management is counting on growth in convergence products, i.e., offerings that bundle mobile and fixed-line services. Fixed-line internet, however, is more of a sideline for O2, as the company uses competitors' networks for this purpose.

Network coverage in industry comparison

Looking at network coverage, O2 Telefónica, according to data from the Federal Network Agency (BNetzA), had 88.6 percent of Germany's area covered with 4G and 76.2 percent with 5G in December 2025. This puts O2 slightly behind Deutsche Telekom with 92.5 percent and Vodafone with 91.7 percent for 4G. For 5G, O2 is also behind Telekom, which reaches 87.9 percent area coverage, but slightly ahead of Vodafone with 75.7 percent.

The O2 parent company belongs to the Spanish Telefónica Group. In Germany, the Munich-based company is currently going through a difficult phase, as, in addition to the lost major customer, price and competitive pressure in the mobile communications market remains high. Management hopes the cuts will result in a leaner structure in order to become profitable again in the long term.

Further steps until 2028

According to the company, the measures now announced are part of a more comprehensive restructuring that will take place in two phases. While the first phase focuses primarily on staff reductions and the closure of branches, the second phase next year is intended to further streamline the organization and expand the use of artificial intelligence in central processes.

The job cuts at O2 Telefónica Deutschland are part of a series of savings measures with which European telecommunications groups are currently responding to stagnating revenues, rising investments in network expansion, and growing competitive pressure. Industry observers, however, see the pressure on O2 as particularly high, as the company does not have its own fixed-line network and therefore has only limited options for binding customers to additional services.

For the affected employees and locations, negotiations on a social plan with the works council are to be expected in the coming weeks. The company has not yet commented in detail on which locations and which areas will be particularly affected by the cuts. O2 also initially provided no further details on possible transitional or severance arrangements.