The fallout from the well-publicised cyber attack that TalkTalk suffered in October 2015 is still being felt by the telecoms company, with the announcement that profits have halved in the first quarter of 2016.
In the period to 31 March pre-tax profits sunk to £14 million, down from £32 million the year before, providing a stark illustration of the financial impact of data breaches.
There is some good news, however, as sales rose 2.4 per cent to £1.8 billion, with customers being offered sweeteners and a new focus on improving customer service.
TalkTalk chief executive Dido Harding said: “The business bounced back strongly in the final quarter following the cyber-attack in October. 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.”
“Customer sentiment towards TalkTalk has recovered. Our learnings from, and experience since, the cyber attack have helped to focus our plans.”
The October cyber attack cost TalkTalk around 100,000 customers and led to the brutally honest assessment from Harding that the security threat was underestimated and the company has serious "lessons to learn."
Andrew Avanessian, VP at Avecto commented: “The significant drop in profits announced by TalkTalk isn’t that surprising given the scale of the cyber attack and the reputational damage it inflicted. All too often we see large scale, well-known organisations fail to address often basic security measures and unfortunately it often takes a breach of this scale to force their hand.
“Large organisations are often so focused on compliance with data protection legislation that they mistake this for robust security. That’s a dangerous assumption. If the security fundamentals are not addressed and the endpoint systems are not secured then you risk undermining all your defences and ultimately putting your customers, organisational reputation and profits in the line of fire.”