Tens of thousands of customers leave Optus after data breach

The number is ‘much less pronounced than it could have been’, chief executive Kelly Bayer Rosmarin says.

Optus chief Kelly Bayer-Rosmarin. Picture: NCA NewsWire / Damian Shaw

Tens of thousands of customers left Optus in the month after its data breach and its churn rate jumped 50 per cent higher than normal, the company said on Thursday.

But Optus chief executive Kelly Bayer Rosmarin told The Australian that she believed the number of departures was “much less pronounced than it could have been”.

Optus on Thursday posted its first financial results since the September breach, setting aside $140m as an ‘exceptional expense’ for the expected costs of actions to prevent harm to customers, such as the replacement of identity documents.

Nearly 10 million Australians were caught up in the breach – with many customers forced to replace their drivers licences as a result.

“We have definitely seen an increase in churn after the cyber attack as well as a reduction in the number of new customers,” Ms Bayer Rosmarin said. “However, that impact has been much less pronounced than it could have been given the size of the number of customers affected.”

She said in October, Optus’ churn was elevated about 50 per cent its usual number, and new sales were down by about 25 per cent. The figures are the first time Optus has confirmed a loss of customers as a result of the breach.

“We saw some negative net customer impact,” Ms Bayer Rosmarin said. “Part of that is that we decided to be completely focused on preventing harm to our customers, so we shut off all our marketing activities. We also shut off all of our retention and direct mail activities to our customer base.

”We’ve been now progressively putting those back on, it has impacted and we’re on a positive trajectory towards that.

As The Australian first reported in late September, an anonymous user leaked customer records after earlier asking the company for a $US1m ($1.6m) ransom. The hacker had stolen the drivers licence or passport numbers of some 2.8 million Australians, and 11.2 million records overall, which they threatened to sell to other cyber criminals.

Optus grew its overall mobile customer base by 304,000 for the six months ending September 30, including prepaid growth of 182,000 which the company said was a result of improved domestic foot traffic and the return of international travel.

The company posted half-year revenue of $3.9bn, flat from the same time last year, while earnings before interest and taxation climbed $51.3m to $146m. It reported an overall net half-year loss of $57m, a steep decline from a profit of $154m a year earlier.

Total customers climbed by 5.2 per cent to 10.3 million and average revenue per user, a key metric, was flat at $31 per month.

But Optus’ parent company Singtel on Thursday said that despite a 23 per cent jump in first-half profit, it expects to be hit by macroeconomic challenges including steep interest rate hikes. It blamed interest rates and a weak Australian dollar as the reasons for writing down the goodwill of Optus by more than $1bn.

“While the cyber attack has regrettably interrupted Optus’ momentum at the end of the first half, we expect Optus to come back stronger,” Singtel chief executive Yuen Kuan Moon said.

Ms Bayer Rosmarin said an external review of the cyber breach, to be conducted by consulting outfit Deloitte, was ‘well underway’.

Ms Bayer Rosmarin said an external review of the cyber breach, to be conducted by Deloitte, was “well underway”.

“It will take some time given the complexity of our systems and environments, but … it is very clear that this was a criminal act perpetrated by a motivated and planned attacker,” she said.

“There are some regulatory reviews that have been announced and we‘re co-operating with those fully.

The company, Australia’s second biggest telco, is now awaiting a decision by Australia’s competition watchdog next month as to whether to allow a high-stakes regional network merger between Telstra and TPG to go ahead.

“That is of course a very important decision for the industry and the future of competition in the telco space,” Ms Bayer Rosmarin said. “It would be unprecedented from a global level. We have been consistent in saying that that doesn‘t serve the interests of fair and open competition and drive the right outcomes for consumers,” she added.

“We think from a competition perspective that they’ll make the right decisions in the best interest of Australia’s future.”