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May 12, 2016updated 05 Sep 2016 11:45am

TalkTalk hack halves profits, but CEO hails how telco has ‘bounced back strongly’

News: Telco puts an end to customer exodus and “significantly” increases security expenditure.

By Joao Lima

After details of nearly 160,000 customers were hacked in October 2015, TalkTalk has reported its full year (FY) 2016 results, which show profits have been cut by half.

The company reported £14m in profits, compared to FY 2015 which saw £32m in profit.

Yet, the company’s boss Dido Harding says "the business has bounced back strongly in the final quarter following the cyber attack".

TalkTalk has managed to put a break to the customer exodus which saw the telco loose 101,000 customers as a result of the £42m security breach.

In the fourth quarter, the company reports that is has added 148,000 new subscribers. 90,000 customers joined the company’s mobile services, while 72,000 singed a broadband contract. Elsewhere, TV customers shrunk 14,000 in the last quarter.

Harding, CEO of TalkTalk, said: "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."

The company reported headline total revenues were up 2.4% to £1,838m (FY 2015: £1,333m). On-net revenues were up 5%, topping £1,399m, compared to £1,333m the previous year. Corporate revenues increase 2.4%, from £375m in FY 2015, to £384m in FY 2016.

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Overall revenues for TalkTalk Business account for 30% of the Group and have grown by over 5% year-on-year (YoY).

Data revenues were also up 23.7% YoY, with over 9,000 new high speed data lines connected. The high growth and business demand for data services has offset a decline in voice revenues (-16.2%), in line with market trends.

The company has also declared a 15% higher dividend for the year. As for FY 2017, TalkTalk’s financial guidance is £320m-£360m EBITDA.

Harding said that TalkTalk is well positioned to build upon its already "strong credentials as the UK’s leading value for money quad-play and B2B operator".

She said: "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.

"We see strong opportunities for growth across all our products, both for consumers and for businesses, against the backdrop of an increasingly supportive regulatory environment."

Harding has also told the BBC that the company has "significantly increased spending on security" and that she is taking "this extremely seriously".

Speaking to CBR, Charles Bligh, MD of TalkTalk Business, Technology and Security, said: "Things have settled down very quickly, customers and the company are past the incident.

"There are substantial improvements in monitoring, security, prevention as well as hardening our assets in our company."

Elsewhere, Raj Samani, CTO EMEA at Intel Security, warned that TalkTalk’s profit slump in the wake of last year’s cyber attack should serve as a warning to corporations across the globe of the impact cybercrime can have to the bottom line.

He said: "Focusing efforts on rebuffing opportunistic cybercrime tactics does not go far enough to defend against such threats. Today, detection and correction of a cyber attack, is just as important as the initial protection stage."

Samani said that corporations cannot afford to dismiss cyber security as a problem solely for the IT department.

The financial future of a corporation – or that of its customers – can hinge upon the security of the information stored, so "it is crucial that the CFO, CEO and other executives take an active role in understanding the level of cyber risk they’re exposed to in order to establish a meaningful and effective cyber security strategy".

"This process will include taking stock of the value of the company’s data assets and implementing mitigation strategies appropriately proportioned to the level of risk involved," he said.

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