TalkTalk takes £60m hit from cyber attack and loses 95,000 customers

TalkTalk takes a big hit after cyber attack

TalkTalk has revealed that the attack on its systems last year cost the company £60m, but that it expects to generate full-year profits after tax of £255m to £265m, despite the cost.

The figure was revealed in TalkTalk’s full-year 2016 financial figures which showed that the attack in October had a £15m “trading impact” and, perhaps more notably, led to £40m to £45m being spent on “exceptional costs”.

These “exceptional costs” relate to restoring online capabilities, enhanced security features, associated IT and incident response and consultancy costs, and offering free upgrades.

This is almost twice the amount that CEO Dido Harding claimed in November it would cost the company after the attack.

“We expect that the one-off impact of this criminal attack will be £30m-£35m. It’s far too early to tell the impact on the business in the long run,” she said at the time.

TalkTalk also looks set to lose out over the long term after revealing that 101,000 customers left the company in the past quarter, 95,000 of whom cited the attack as the reason.

“We added fewer new customers to the base as we closed down our online sales and service channels as part of our response to the cyber attack, and took longer than expected to restore these channels to full operational effectiveness,” TalkTalk said. 

“We also experienced higher churn in the immediate aftermath of the attack … which we estimate was caused by the attack.”

Harding attempted to put a positive spin on the situation despite the huge associated costs by claiming that TalkTalk was rebounding well and that remaining customers are happy with the company.

“It is encouraging to see the business returning to normal after a challenging quarter that was dominated by the attack,” she said. 

“Churn and new connections recovered during December and January and independent external research has revealed that customers believe that we acted in their best interest. In fact, trust in the TalkTalk brand has improved since just after the attack and consideration is higher now than it was before the incident.”

The attack resulted in the loss of roughly 1.2 million customer email addresses, names and phone numbers and up to 21,000 unique bank account numbers and sort codes.

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2 February 2016 | 11:55 am – Source: v3.co.uk

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