TalkTalk on Wednesday announced it will offer customers free upgrades, including TV content and unlimited calls, in the wake of last month’s cyber attack, which the telco estimates will cost it £30 million-£35 million.
The charges will be recognised in TalkTalk’s fiscal second half, and consist of the cost of communicating with affected customers, internal and external IT costs, the forgone revenue due to TalkTalk’s Websites being offline for three weeks, an uptick in churn, and the estimated cost of the free upgrades.
The cyber attack, which took place on 21 October, compromised the accounts of 156,959 TalkTalk customers, 15,656 of whom had their bank account numbers and sort codes stolen. 28,000 partial credit or debit card numbers were also stolen.
"There has been a degree of unavoidable uncertainty over the last few weeks," said TalkTalk CEO Dido Harding, during the company’s first half results presentation.
However, she insisted that "the majority of customers are very supportive of our response," noting that while TalkTalk saw a spike in direct debit cancellations immediately fol lowing the attack, "some of the very same customers have since re-established their direct debits."
Nonetheless, the free upgrade offer is in recognition of the issues that subscribers have had to contend with following the cyber attack, she said.
From 1 December, TalkTalk customers will have the option to choose from a selection of offers, including TV content, unlimited calls to U.K. fixed and mobile numbers, a mobile SIM with an allowance of free texts, data and calls, and a broadband ‘health check’ from TalkTalk engineers.
Customers will not be required to sign up to a new contract; the offer expires on 31 December.
The announcement was made the same day that TalkTalk reported revenue in the first six months of fiscal 2016 grew to £912 million from £871 million a year earlier.
The telco’s on-net broadband customer base fell by 80,000 to 4.11 million during the first half, as the company adopted a policy of disconnecting non-paying customers after 90 days instead of 180. As a direct result, 72,000 subscribers were disconnected.
TalkTalk attributed the remaining 8,000 net subscriber losses to aggressive competition from the likes of BT, which has been heavily promoting its range of premium sports content, which as of the summer includes Champions League football.
MVNO customers jumped by 132,000 during the half, leaving TalkTalk with 596,000 in total. TV customers increased by 25,000, giving TalkTalk a triple-play base of 1.4 million, or 39% of its overall subscriber base, compared to 33% a year earlier.
Meanwhile, first half EBITDA fell to £90 million from £110 million a year earlier. This was due to investments made in the Making TalkTalk Simpler (MTTS) transformation programme, which as the name suggests, aims to simplify the telco’s operations in a bid to save £90 million-£100 million by fiscal 2017.
