There will probably be no dividend payout in TalkTalk, and the recent cyber-attack is to blame. The company recently announced it will pay its shareholders, but following the devastating cyber-attack which exposed personal details of more than 150,000 customers, the scenario is highly unlikely.
According to a couple of market analysts, paying out would be an extremely risky move.
Steve Malcolm, of the independent equity research firm Arete, said that keeping the promise and raising the dividend would mean the company borrowed £350m over the last three years to pay shareholders. Net debt would also have risen by £350m, implying no net cash flow.
He said: “After three years of borrowing heavily to pay its dividend, they would need to be very brave to recommend an interim dividend.”
The Telegraph said Citi analysts predicted a similar outcome.
Late last month, British telecom company TalkTalk suffered a cyber-attack, with first estimates saying that more than 4 million people have had their personal information compromised.
However, after further inquiry it was unveiled that some 150,000 people were affected.
A couple of arrests have been made across the country, with four boys spanning ages 15 – 20 being arrested, and quickly bailed out.
One of the boys arrested, a 15-year-old from Northern Ireland, sued three national newspapers for alleged breach of privacy.
Reports in RTE claim the boy’s lawyers are suing the Daily Telegraph, the Daily Mail and the Sun. They have also opened legal proceedings against internet giants Google and Twitter. His lawyers have issued writs claiming negligence, misuse of private information, defamation, breach of confidence and data.