October’s TalkTalk cyberattack and breach has cost the company close to 100,000 customers and £60 million, it announced as part of an earnings update this week, as the fallout from the incident becomes clear. The latest in a series of headline-grabbing data breaches is shaping up as another example of security incidents incurring additional, unforeseen costs.
TalkTalk CEO Dido Harding said that 500,000 customers (of approximately four million) had accepted the company’s offer of a free upgrade in the wake of the breach, and that business was returning to normal.
“Both 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,” Harding said in the earnings call. “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.”
Despite the reputational recovery of the communication services provider, which was no doubt aided by the November announcement that it had affected 157,000 customers instead of the million or more initially feared, it estimates the breach cost 95,000 of the 101,000 subscribers who have left since it occurred.
Some TalkTalk mobile services sales operations only returned to full functionality in January, as security enhancements and consultations added to exceptional costs like free upgrades to reach a total of £40-45 million. TalkTalk also suffered losses from trading impact of £15 million and from a reduced customer base of £20 million, according to the update. Harding had previously told the BBC that she believed the total cost of the breach would be in the £30-35 million range.
TalkTalk recognizes the need to continue to address its reputation as it presents an optimistic outlook on future earnings, but research by consumer analyst Imran Choudhary of Kantar Worldpanel indicates the damage may be greater than TalkTalk publically admits.
“If it’s to recover from recent events TalkTalk will need to offer more than just good value,” Choudhary says.