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TalkTalk offers free upgrade to customers and takes £35m cyber attack hit

A 15-year-old boy from Northern Ireland was arrested in connection with the alleged data theft

Telecoms firm TalkTalk said it will take a hit of up to £35 million from last month's cyber attack and announced a free upgrade for all its customers.

The group said it was making the move in "recognition of the unavoidable uncertainty" customers faced after hackers accessed the details of 156,959 customers and 15,656 bank account numbers.

Chief executive Dido Harding, said: "TalkTalk takes the security of customers' data extremely seriously and we are taking significant further steps to ensure our systems are protected, as well as writing to all our customers outlining what we are doing to keep their data safe.

"In recognition of the unavoidable uncertainty, and because we know that doing what is right for our customers will ensure the best possible outcome for the company over the longer term, we are today announcing the offer of a choice of free upgraded services to all our customers."

TalkTalk said it was too early to assess the wider impact of the cyber attack on the business, but estimated the one-off financial cost of up to £35 million including the loss of online sales and services.

The details came as it announced half-year figures revealing a 4.7% rise in underlying earnings to £912 million for the six months to September 30.

On a bottom line basis, it posted a pre-tax loss of £8 million against profits of £20 million a year earlier.

The group said "significantly" fewer customers were affected by the hack than initially feared and added all customer-facing online sales and service channels were back up and running.

TalkTalk had earlier said it may have lost the personal details of up to 1.2 million customers as well as up to 21,000 bank account numbers and up to 28,000 obscured credit and debit card details.

The firm said last month it will only waive termination fees for customers wanting to end their contracts if money is stolen from them.

In recent weeks three teenage boys and a 20-year-old man have been arrested by the police in connection with the alleged data theft from TalkTalk.

This is the third time that data from TalkTalk has been hacked in the last 12 months.

A parliamentary committee will now conduct an investigation into the circumstances surrounding the TalkTalk data breach and the wider implications for the security of personal information online.

The House of Commons culture, media and sport committee will start taking evidence later this month.

TalkTalk confirmed all its customers, not just those affected by the hack, will be able to select an upgrade from December 1.

They will be able to add one of the following to their existing services with the group: TV content including movies, kids entertainment and sports; a mobile SIM with a monthly allowance of free texts, data and calls; u nlimited UK landline and mobile calls; or a broadband health check by experienced engineers.

The group has also created a new bundle of online and telephone security features to boost customer protection.

TalkTalk said the financial impact of the attack will impact its full-year results, but sought to reassure it remained confident of a "material increase" in profits in the following financial year and beyond.

Ms Harding insisted the firm had a "robust plan to deliver a significant step-up in profits in the second half, underpinned by the benefits of our transformation programme coming through strongly".

But TalkTalk's move to appease customers comes after experts at Citi recently warned the impact of the bad publicity and the suspension of its website, which is a key means of selling products to customers, may see it lose around 200,000 accounts by the end of the full-year, leaving it with around 4.1 million customers.

TalkTalk added that early signs of so-called churn - customers leaving the group - and retention were "encouraging" since the attack.

Overall in the first half, it said its broadband customer base fell 80,000 to 4.1 million, including 3.4 million residential accounts, after it disconnected 72,000 non-paying customers in arrears.

On an underlying basis, it added 8,000 fewer customers on a net basis - those joining, less those leaving - as it came up against a highly-competitive wider market in the first quarter, although trading improved in the following three months.

But it grew its mobile customer base strongly in the half year, with 132,000 net additions.

Speaking to BBC Breakfast, Ms Harding said she believed customers would continue to trust TalkTalk based on measures taken to step up security.

She said: "The majority of our customers think that we are doing the right thing by being open and honest. I have been humbled by the number of customers who have directly contacted me and said just that.

"Over the course of the last three years we've spent a third more on security and I can absolutely guarantee that going forward we will spend much more again. "

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