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The total represents about one fifth of the mmO2 workforce, and offices at Leeds and Slough are expected to be worst hit. Over 130 of its existing 320 retail outlets will also be closed, with the company announcing its intent 'to focus and develop its resources to drive network quality, further improve customer service and develop the next generation of voice and

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data services'.

The restructuring programme - taking place in a saturated mobile market - officially marks a transition away from purely volume sales towards the provision of revenue-generating services. In layman's terms, the company knows it can no longer rely on constantly generating revenue from new users - we all have mobile phones now - but must maximise revenue from existing customers in terms of services provided. Expect minimum-package pay-as-you-go offerings to become increasingly uncompetitive.

According to Peter Erskine, CEO of mmO2, 'Our imminent rebranding to O2 across Europe is much more than just a change of name, as we concentrate our efforts on increasing and communicating the benefits O2 customers gain through our voice, text and mobile data and internet services.'

It's not only the UK that is affected - another 500 jobs are to be cut at the German subsidiary Viag Interkom.

The company expects to make savings of £70m a year on the back of the cuts.