Almost 90% of the UK workforce at the telecoms company Lycamobile have been told they could lose their jobs, the Guardian has learned, in an announcement that leaves more than 300 staff fearing for their roles shortly before Christmas.
The company, owned by the multimillionaire Tory donor and British-Sri Lankan businessman Allirajah Subaskaran, sells pay-as-you-go sim cards popular with low-paid workers wanting to make cheap phone calls to family overseas, as well as in the UK.
On Friday, staff at the Lycamobile’s headquarters in the City of London were told that the company was facing “pretty serious challenges” and was planning to cut up to 316 jobs, leaving as few as 48 in the UK.
Lycamobile lost £24m in 2022, the last year for which accounts are available, and its auditors have raised concerns about the opacity of the company’s books. It is also locked in a protracted tussle with HMRC over an alleged £51m unpaid VAT bill related to phone “bundles” sold to customers.
Last year, the group’s French business was fined €10m (£8.3m) by a Paris court for money laundering and VAT fraud.
Addressing staff on Friday, the company’s general counsel, David Dobbie, blamed competition, cost inflation, “legacy technology issues” and internal inefficiencies due to overlap between divisions based in the UK and India. He did not mention the company’s tax disputes.
Dobbie said some of the services due to be cut in the UK, such as customer service, would be moved offshore, including to India.
He said it would take some time before staff would learn their fates, with a consultation on jobs to start imminently. He promised that nobody would be dismissed before 31 January.
“This proposed expansion of global service centres is going to unlock significant cost savings for us,” he said, asking for the support of staff to “make this no harder than it needs to be”.
Cuts are expected to be felt across several businesses in the Lyca group of companies, which include property, media and a restaurant chain, Bella Cosa.
In 2019, Labour described Boris Johnson as “unfit” to be prime minister, over reports that he attended a private dinner at Bella Cosa and met Allirajah, as he sought financial backing for his attempt to become Tory leader. The criticism is understood to have related to Johnson’s decision to attend the meeting while Lycamobile was under investigation for money laundering in France.
Lycamobile donated more than £2m to the Tories between 2011 and 2016. Allirajah gave Johnson gifts worth £600 while he was the London mayor, including flowers and a £100 hamper for his birthday.
Allirajah is reportedly entering politics in Sri Lanka himself, through an attempt to unite Tamil parties in the country.
A spokesperson for Lycamobile 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.
“In parallel, our HMRC matters are ongoing in accordance with our previous statements and there are not material updates at this time.”
