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May 15, 2016

Hack cost TalkTalk £60 million and 101,000 customers

With so much coverage in the press about hacking, it is easy to become blasé about the threat and the consequences of an attack. This article serves as a reminder of the true cost to businesses that falls foul of cybercriminals.

The true cost of TalkTalk’s 2015 cyberattack has been revealed, with the telecoms firm thought to be facing a £60 million bill for the high-profile breach.

The company was attacked in October last year, with hackers gaining access to the personal information of some 157,000 customers. This included 15,600 bank account numbers and sort codes.

Although reports released in the immediate aftermath suggested that TalkTalk hadn’t been as badly affected as initially feared, the company has since almost doubled its expected cost – from £35 to £60 million. This is made up of £15 million in lost revenues and £45 million to meet ‘exceptional costs’.

Reduced growth and falling share values

Since the attack, TalkTalk has actually reported a 1.8 per cent revenue increase, though this is smaller than then 4.2 per cent growth reported during the same period in 2014. It’s also a marked decline on the 5.9 per cent revenue boost experienced in Q2 2015 – the last before it was hacked.

It’s been a similar story on the stock market, as shares in TalkTalk have dropped 30 per cent since the attack, though they’ve risen by 8.5 per cent more recently.

In terms of actual customer volumes, some 101,000 accounts with the company are thought to have been closed, with 95,000 of these being a direct result of the data breach.

TalkTalk boss, Baroness Dido Harding, told “Clearly the past few months have been dominated by improving security systems following the attack, but it is encouraging to see the business returning to normal after a challenging time.”

But the future is looking tough for TalkTalk, since many consumers complained at the time about being tied into lengthy contracts from which they couldn’t escape. As such, the truest indication of how much the hack cost TalkTalk will likely come in two years, when all of the long-term agreements have run their course.

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