TalkTalk is set to cut hundreds of jobs in a sweeping effort to slash costs by £120m, as the debt-burdened broadband provider embarks on a radical restructure to restore its financial health.

In an update to investors last week, the company confirmed a “radical” overhaul, with initial redundancies already under consultation. Around 130 positions are set to go at its Salford-based consumer division, while further reductions at its wholesale arm—known internally as Platform X—are expected to push total job losses into the hundreds.

The cuts are anticipated to fall heavily on central head office roles after TalkTalk admitted that multiple business units and management layers had weighed down operating expenses. The company reported a workforce of 1,857 in February, two-thirds of whom were in administrative roles.

The redundancies form part of a wider cost-cutting agenda targeting more than £120m in savings, around 60% of which TalkTalk intends to achieve within the next 12 months. Alongside job losses, the cost reduction plan is expected to encompass the sale of non-core businesses, office closures, and tighter controls over marketing, travel, and catering budgets.

In addition, TalkTalk plans to automate more tasks, ramp up its use of artificial intelligence, and consider outsourcing and offshoring options to streamline operations.

These measures come after TalkTalk narrowly avoided collapse this summer, as founder Sir Charles Dunstone and other key shareholders rallied to provide a vital cash injection, preventing a debt default. Despite the emergency support, TalkTalk remains heavily indebted, with a £1.2bn burden generating substantial servicing costs. Losses have soared to £72m for the six months to the end of August, while its customer base slipped from 3.6m in February to 3.4m by 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 debt conditions. While he sees a path back to generating around £70m in operating free cash flow if cuts are realised, this would still be insufficient to cover existing interest obligations.

In a bid to raise funds, TalkTalk last year broke up its business and has since sought buyers for either the entire group or parts of it. Talks with Australian investor Macquarie over a potential £500m investment in Platform X failed to deliver a deal earlier this year.

A TalkTalk spokesman 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 we can continue offering great value connectivity to millions of UK customers. 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.”