Lycamobile is slashing its UK workforce by 90%, putting more than 300 jobs at risk just days before Christmas.

The telecoms firm told staff at its London headquarters that it faced “pretty serious challenges”, with the redundancies reaching 316 and potentially leaving just 48 employees in the UK.

Its general counsel David Dobbie, attributed the cuts to inflation, competition and legacy technology issues, according to The Guardian.

In a staff meeting last week, he said a consultation would soon be underway, although warned the process could take some time to carry out. Nobody would lose their jobs before 31 January 2025, he added.

Redundancies are likely to affect several operations in the Lyca group, which include media, property and the Bella Cosa restaurant chain.

Some of the UK services which will be axed, including customer service, will be shifted offshore to countries such as India.

“This proposed expansion of global service centres is going to unlock significant cost savings for us,” Dobbie said, reportedly asking for support f employees to “make this no harder than it needs to be”.

Founded by Sri Lankan businessman Subaskaran Allirajah, Lycamobile claims to have more than 16 million customers in 22 countries globally.

The business sells pay-as-you-go sim cards, which are primarily targeted at low-paid workers who want to make low-cost phone calls, both in the UK and overseas.

In 2022, the company lost £24m and it is also engaged in a long-running battle with HMRC over an unpaid VAT bill allegedly amounting to 351m.

A year later, its French business was fined the equivalent of £8.3m for money laundering and VAT fraud.

A Lycamobile spokesperson said: “As with all other UK companies, Lycamobile reviews its business model on an ongoing basis to provide the best possible service to its customers.

“No final decisions have been made on any changes to our model at this time, but we have announced a consultation process regarding strategic changes to align with our long-term growth goals and the challenges facing our business and other telcos, including a focus on digital transformation.”

The spokesperson added that its dealings with HMRC are ongoing and said there are currently no updates on the situation.

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