Giddy said a telecom company’s reputation was critical, citing the earlier outcry on social media about service outages at Vodafone under the tag #vodafail.
He said Optus would expect higher IT costs to prevent such breaches again and he believed it could suffer longer-term brand damage, comparing the situation to recent negative publicity surrounding Qantas. The government has also announced tougher fines for future violations.
“The fines are one-off. Brand damage is a longer term thing,” Giddy said.
“I believe this is a gift to Telstra to tarnish Optus’s very bad reputation,” said Giddy, whose fund owns Telstra stock. “Obviously they’re trying to stick as many fingers in the dike as they can, but they’re going to lose customers.”
Pressured on CEO Kelly Bayer Rosemary, Optus owner Singtel released a statement Wednesday night supporting the Optus boss and saying that all customers affected by the incident are “deeply sorry”.
“We have offered our fullest support to Kelly and the Optus management team as they work to minimize customer inconvenience and risk,” said Singtel.
Telecom companies process large amounts of personal data, making them prime targets for hackers, and Luke Clifton, chief executive of Macquarie Telecom Group, predicted the incident would prompt more consumers to ask questions about how their personal data was stored. He said the threat of cyber attacks is not new or unique to telecom companies, although they are becoming more common.
“The threat is increasing but has been widespread for decades,” Clifton said.
Morningstar analyst Brian Han said privacy and security breaches are the top environmental, social and governance (ESG) risks facing telecom companies and the hack was “unfortunate” but it could have happened to any company. While he said Optus’ reputation would “certainly” be tarnished, he wasn’t sure if there would be a major shift in market share over the long term.
“I think this idea that Optus has been kind of careless with their customers’ data – I just don’t believe that. The details of the compromised customers could have been more transparent. But if all of this translates into better safeguards and better responses in the future, then that can’t be bad for the industry,” Han said.
Beyond telecom companies, the incident is a stark reminder of how financially damaging a cyberattack can be – a risk that is particularly acute for companies with large amounts of sensitive data, such as banks.
Singtel’s share price has fallen about 2 percent since the hack became public, but some overseas cyberattacks sparked even more dramatic market reactions. When US credit agency Equifax reported a major data breach in 2017, its stock fell about a third over the following week, and its chief executive quit the job shortly after.
The owner of this masthead, Nine Entertainment, was the target of a cyber attack last year that disrupted its publication and broadcast. Its shares fell 2.4 percent the day after the attack.
Fund manager Alphinity’s director, Andrew Martin, said cyber risk was a particularly big concern for banks, which were “under attack all the time,” but the issue was now becoming a much bigger topic of conversation in the corporate world.
“All the analysts and fund managers are going to want to know what the companies are doing in this space, what the risk is, what your cyber insurance is and how you deal with that when it comes up?” said Martin.
With the stakes high, boards are being challenged to increase their knowledge of cyber threats. In the banking sector, the issue has been identified as a supervisory priority for Australia’s Prudential Regulation Authority this year.
Robert Di Pietro, head of cybersecurity and digital trust for PwC Australia, said directors need to have a basic understanding of cyber risk, much like they would of other types of risk such as credit risk or fraud.
“Cyber is just one of those risks, and we need to improve our understanding of cyber in the boardroom,” Di Pietro said. “The right cybersecurity culture has to start at the top.”
https://www.smh.com.au/business/companies/a-gift-to-telstra-cyberattack-to-hit-optus-reputation-20220928-p5blmq.html?ref=rss&utm_medium=rss&utm_source=rss_business Cyber attack to hit reputation, “a gift to Telstra”