TalkTalk profits slump as cyberattack aftershocks continue to be felt, but it wants to build advanced mobile network services and double business unit
TalkTalk continues to feel the aftershocks of the devastating cyber-attack it suffered last year as profits slumped from £72 million in 2015 to just £2 million in the 2016 financial year.
In its last set of quarterly results published in February, the company confirmed the attack caused 95,000 subscribers to leave the company and up to £60 million in lost revenue and exceptional cost.
And today in its full year financials, TalkTalk revealed the number of customers on its core landline and broadband network fell from 4.17 million in 2015 to 3.996 million at the end of the most recent year.
Cyber attack hangover
“The impact on Q4 revenues was more pronounced than in Q3 as we entered the quarter with a smaller customer base and it took longer than we had originally anticipated to fully restore our online channels,” the company said.
However TalkTalk is looking to the future, citing “record low” customer churn of 1.3 percent and claiming its open and transparent response to the incident – including the offer of free upgrades – has helped foster the return of customer sentiment.
It said it added 90,000 new mobile customers in Q4, contributing to 235,000 net additions, bringing its total user base to 700,000 and says its new mobile virtual network operator (MVNO) agreement with O2 will give it greater control over its mobile service and allow for the development of hybrid infrastructure.
TalkTalk also added 225,000 fibre users in the past year, bringing its total user base to 704,000 – 19 percent of all of its broadband subscribers. The company has also launched its ‘Ultra Fibre Optic’ (UFO) service in York and hopes to expand its fibre to the premise (FTTP) infrastructure elsewhere in the country if the project is a success.
TechWeekEurope understands more could be revealed about the FTTP rollout before the end of this calendar year.
TalkTalk Business now accounts for 30 percent of group revenues and rose by 5 percent during the year thanks to rising data revenues which offset declines in legacy voice services. The company hopes to double the business in the medium term by selling more data products and VoIP packages.
“The business bounced back strongly in the final quarter following the cyber attack in October,” said TalkTalk CEO Dido Harding. “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.
“TalkTalk is well positioned to build upon our already strong credentials as the UK’s leading value for money quad-play and B2B operator. 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.”
TalkTalk has been touted as a potential takeover target for CK Hutchison, parent company of Three, now that its proposed £10.25 billion takeover of O2 has been blocked.