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TalkTalk hack to cost up to £35m

January 10, 2016 By: Dr Search Principal Consultant at the Search Clinic Category: Browser, Computers, Customer Service, Cyber Security, Hackers, internet, Search Clinic, Uncategorized

The cyber-attack on TalkTalk could cost it up to £35m in one-off costs, the company has said.

The cyber-attack on TalkTalk could cost it up to £35m in one-off costs, the company has said.

Following the hack, which divulged some 255,000 users’ financial details, all customers of the telecoms group will be offered a free upgrade.

Chief executive Dido Harding said that despite the hack, TalkTalk was “well positioned to deliver strong and sustainable long-term growth”.

The firm expects still full year results to be in line with market expectations.

TalkTalk shares were still down more than 20% compared with their pre-hack value.

She added that in recognition of the uncertainty that this had caused customers, they would be offered an upgrade.

A spokesperson said the type of upgrade offered would depend on the kind of package customers already had. For example, customers with TV packages might be offered a sports channel that they did not already have.

Customers who were financially affected directly will be free to leave TalkTalk without financial penalty. They would have to be able to show they had lost money as a result of the hack.

Customers who wish to leave for a different reason – for example, if they feel their data is not secure – would still have to pay a contract termination fee.

Some of TalkTalk’s millions of customers might have been angry enough to try to terminate their contracts when the telecommunications company first revealed details of a major data security breach last month.

But, with contracts for mobile, fixed line, broadband and television services of up to two years (always worth looking at those few lines at the bottom of the paperwork) customers found they couldn’t leave TalkTalk without incurring hefty costs.

When Dido Harding, the chief executive, first announced two weeks ago that customers would only be able to leave if they could show a “direct impact” on their bank account – a pretty high bar – investors heaved a sigh of relief and TalkTalk’s share price bounced up.

It was up again this morning – by more than 12% – as the half-year results revealed that TalkTalk was still expected to make £300m profit before tax this year. And that revenues were up 6%.

On 21 October, hackers attacked TalkTalk’s website, stealing confidential customer data including passwords and bank accounts.

The firm was initially uncertain as to the extent of the hack, but after an investigation it said last week that 157,000 of its customers’ personal details had been accessed.

Ms Harding told the BBC that it was “too early to tell” what the longer-term impact of the breach would be on the business.

“We of course saw an immediate spike in customers cancelling their direct debit, but actually after a few days we saw many of those customers reinstating their direct debits again, so time will tell, but the early signs are that customers think we are doing the right thing,” she told BBC business editor Kamal Ahmed.

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