Cable.co.uk comment on this morning's TalkTalk annual financial results
- Profits more than halved, TalkTalk points to last year's cyber-attack as key factor
- Attack lost TalkTalk 101,000 customers during last year's final quarter, but this represents only 3% of its total customer base
- Switching costs, convenience and loss-averseness key factors in relatively small proportion of switchers and leavers
- Telecoms expert Dan Howdle cites his own research on switch reluctance, pointing out that half of broadband customers in the UK have never never switched
Thursday 12 May 2016: This morning, TalkTalk released its annual financial results, showing that its profits fell to £14m from £32m the year before.
Chief exec Dido Harding highlights increase in security spending as prime factor.
"The customer base has really stabilised and this is testimony to the fact that our customers really appreciated our open and honest approach and how we tried to look after them through the cyber attack," she said.
However, Cable.co.uk telecoms expert Dan Howdle believes there are more factors at play.
“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.
"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."
Notes to editors
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Dan Howdle has been plugged into the attitudes of UK broadband, TV and mobile customers for over two decades, running research fieldwork both nationally and internationally on behalf of the biggest players in the industry. Dan is now consumer telecoms analyst at Cable, as well as more formally operating in the role of its Director of Communications and Content.
An experienced broadcaster, commentator and writer, Dan has appeared on BBC TV and radio, ITV, Sky and in the national papers. Dan has advised Ofcom on issues surrounding service quality, administered Cable’s Broadband Service Quality Awards and sat on the panel of judges for the Internet Service Providers Association annual awards.