TalkTalk FY profits more than halved after cyber attack

Full year pre-tax profits at telecoms group TalkTalk more than halved to £14m after last year's embarrassing cyber attack cost the company £42m.

Revenue was up slightly to £1.83bn from £1.7bn. Exceptional items jumped to £88m from £30m including expenditure to limit the damage from the attack in October which saw the details of thousands of customers stolen.

TalkTalk said churn improved significantly during the quarter and at 1.3%.

The company said it was reiterating its full year 2017 guidance of “modest” revenue growth and earnings before interest, tax, depreciation and amortisation of £320m-£360m.

“Consistent with the trends seen in Q4, we expect to see headline revenue decline in H1 2017, reflecting the smaller on net base, and return to growth in H2 as comparatives ease,” the company said.

Cable.co.uk telecoms expert Dan Howdle believes there were more factors at play for the company, adding that the company's refusal to allow anyone to leave without an exit fee allowed it to limit the damage caused by the cyber attack.

“TalkTalk suffered three major security breaches in 2015, something savvy customers should not easily forgive. That TalkTalk lost only 3% of its existing customer base, however, points to problems both with the switching process itself and with its public perception," he said.

"Our own research shows that only around half of UK broadband customers have ever switched provider. The key factors a tend to be the financial cost of getting out of your contract (TalkTalk allowed no one a free exit), and risk averseness – a feeling of 'better the devil you know'."

"Clearly the situation needs improvement. If a provider fails in its remit to protect its customers and their data there should be a free get-out clause. There isn't, and that has allowed TalkTalk to limit the damage the attack caused it."

"Broadband customers today have an immense amount of choice available. Almost everyone could save money and/or find a better deal if they take just a few minutes to compare what's out there."