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Veon says the December cyberattack on Ukrainian subsidiary Kyivstar's network will have a $95 million impact on revenues in 2024.
January 18, 2024
Operator group Veon has announced that the widespread outage caused by a cyberattack last December will wipe about $95 million off annual revenues at subsidiary Kyivstar – the largest operator in Ukraine, with roughly 25 million customers. Rather than direct damages, the cost will come from customer loyalty measures taken after the attack, which has been attributed to a Russia-linked group and will impact 2024 consolidated earnings.
Kyivstar launched loyalty offers in the wake of the attack, carried out on December 12, with some customers given one month's services for free. It says the outage will have "no material financial impact" on 2023 results from service disruptions, lost equipment, IT capabilities required to restore services or compensation of external parties. The operator will also carry on with remediation and compensation efforts in coming months, but says it cannot estimate their revenue impact for now.
The cyberattack left customers without access to the Internet, voice calls or text messages. It reportedly caused an outage at an air raid siren in the city of Sumy and a number of cash machines. Kyivstar announced on 19 December that 99% of services had been restored.
At the time, Kyivstar CEO Oleksandr Komarov called the attack one of the largest the industry had seen. The hacker group Solntsepyok, which has claimed responsibility, has been linked to another hacker group called Sandworm, thought to operate under Russia's GRU and said to be behind past cyberattacks against power infrastructure in Ukraine and Denmark.
It has been suggested the attack against Kyivstar came after the hackers infiltrated its network as early as last May. Illia Vitiuk, head of the cyber security department at the Security Service of Ukraine (SBU), said it is likely the first attack to have completely destroyed an operator's core in an interview with Reuters, adding it had wiped "almost everything," including virtual servers and PCs.
Kyivstar had a number of measures in place to protect against different types of Russian attacks, including a reserve national core site, and has had to deal with the far-reaching impacts the war has had on its network.
The 3.6 billion Ukrainian hryvnia would amount to about to about 11.6% of Kyivstar's 2022 total revenues, which stood at UAH31.1 billion ($830 million, at today's exchange rate). EBITDA for the financial year was about UAH18.3 billion ($490 million). Revenues have, however, been rising at the Ukrainian operator, with third-quarter total revenue up 13.8% year-over-year in 2023, to UAH8.7 billion ($230 million).
Read more about:Asia
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