TalkTalk full-year profits slashed in half after cyber attack

Profits fall from £32m to £14m

The cyber attack on TalkTalk in November 2015 caused profits for its 2016 financial year to fall to £14m, less than half the £32m posted in 2015.

TalkTalk's financials show that the firm incurred costs of £83m in fiscal 2016 for ‘exceptional items' compared with £46m in 2015. This sizeable increase was no doubt due to the cyber attack that affected millions of customers.

The huge decrease in profits is a stark example of the damage a cyber attack can have on a company's bottom line, and comes in the same week that the government claimed that two-thirds of UK firms have experienced a cyber attack in the past 12 months.

TalkTalk chief executive Dido Harding claimed that the firm had bounced back well in the final quarter of 2015, despite the impact of the attack.

"We recorded our lowest ever churn and stabilised the broadband base, testimony to the speed with which customer sentiment towards TalkTalk has recovered, the success of our greater focus on existing customers, and the growing benefits of our simplification programme," she said.

Harding also claimed that the cyber attack had actually had a positive outcome for TalkTalk by helping the firm to improve security at the centre of its operations.

"There has never been a clearer space for a trusted value champion, and our learnings from and experience since the cyber attack have helped to focus our plans for the year ahead," she said.

Dido added that customers are now more confident in the security in place at TalkTalk, and revealed that customer churn, i.e. the number of people switching to another operator, was just 1.3 per cent in the quarter, suggesting that there is some truth in the claims.

TalkTalk lost 101,000 customers in the previous quarter, 95,000 of whom cited the attack as the reason.