‘We’re more trusted after our data leak’
Now TalkTalk boss hopes they will listen to the economic case for staying in Europe
IT’S been a tough year for Sir Charles Dunstone. The chairman of mobile group TalkTalk faced a reputational crisis when the company admitted a major data leak. Details of up to 4million customers had been stolen by cyber criminals.
Critics slammed the business and the shares slumped. Between early October and early November the shares dived by almost 30 per cent. The collapse in the price knocked more than £260million off the value of Dunstone’s own 30 per cent stake. ‘It was the worst thing I have been through as a businessman,’ admits Dunstone.
In the end the data leak turned out to be far smaller than first feared – affecting just 156,000 customers – and many criticised chief executive Dido Harding for jumping so quickly to make a public statement. But Dunstone will have none of it and argues that being honest immediately was the right decision for customers and for the business.
‘Dido felt very strongly that she had to warn customers and rather than write them a letter the immediate thing to do was talk to the media,’ he says.
‘It is one of the slings and arrows of life and business and we got on with it.’
The debacle put a big dent in TalkTalk’s profits, which halved to just £14million. But the group still added almost 150,000 new customers in the months after the leak.
‘People gave us credit for going on the front foot, owning up to the problems, taking the criticism on the chin and dealing with it,’ says Dunstone. ‘The business has recovered much more quickly from it than I feared. Extraordinarily, our rating as an honest company has soared.’
But despite all this Dunstone is not so rash as to believe the public will automatically trust him when it comes to the subject of Europe. He is firmly in the Remain camp and says he has been encouraged by other business people to come out and make his views public.
‘You just have to be careful,’ he says. ‘I am sure people will be sitting there saying: “Who the hell is Charles Dunstone and why is he telling me what I should think about Europe?” But I am not doing that. I am just telling you what I think.’ And what he thinks is plain. ‘What business and investors hate the most is periods of indecision and the unknown,’ he says. ‘And the process of extraction from the EU will be very long. Even if in two years’ time it is all done, those two years will be incredibly painful.
‘No one would invest any money. No one would understand what was going to happen. The pound would be very weak. That period of insecurity would be incredibly damaging and difficult to deal with.
‘If we leave, the EU would not be very generous in any deal because if someone has left the gang you have to make sure no one else is incentivised to follow them. They would end up being very tough with us and it would take ages to sort.
‘I accept that maybe in ten years’ time it would have all sorted itself out and we would have new free trade agreements, but the interim would be very uncomfortable.
‘Now, if everyone understands that and still thinks it is worth leaving, then you have to accept that view.’
Dunstone, 51, is speaking in TalkTalk’s head office. The group is one of the two that emerged from the original Carphone Warehouse. The other is Dixons Carphone. Dunstone, who is reputedly worth £1.3billion, is chairman of both.
Despite his elevated status in the firm, his office is a glass affair that looks out on to a floor of staff at TalkTalk’s West London headquarters close to the Westfield shopping centre. The building has the air of a 1960s university. Lots of exposed smooth concrete and steel.
It is also an unassuming office for a man who started Carphone Warehouse from a two-bedroom flat in 1989. Mobile phones were then a luxury item. Toys for City types.
‘I have been unbelievably lucky,’ he says. ‘No one anticipated that mobile phones would get the penetration they did. No one could foresee how the mobile phone would become the remote control for your life.’
LUCKY is certainly how many would see it. Dunstone has homes in West London and Norfolk and enjoys indulging his love of sailing. There is a dinghy at the Norfolk house, though his outings in that are rarer than they used to be.
He has a racing yacht and is chairman of Ben Ainslie’s America’s Cup bid. There is also a ‘gentleman’s motor yacht’ in the Mediterranean, which Dunstone bought and had renovated. A vast photo of the restoration project is on his office wall.
Dunstone says he did not originally set out to be as successful as he has been – ‘I just wanted to make a living’ – and it took him a few years before he was sure the business would work.
‘When we opened our first shop in Oxford Street and we were putting up posters, there was a guy running a souvenir cart and he said: “You are opening up a shop here, are you?”, ‘And I said: “Yeah, it’s our first”. Then he replied: “I have seen every single type of business go into that shop and they all fail”.
‘But the one insight we had was that we knew the people who got the most out of mobile phones were the self-employed and small businesses, but the companies were selling them to bankers. The market was targeting the wrong customers. That was our one insight.’
The merger last year of Carphone’s retail chain with Dixons was widely derided in the City, but trading figures out last week confounded the sceptics. Sales were up 5 per cent and the company’s chief executive, Seb James, described it as ‘a stonking year’.
Dunstone is satisfied that the merger has been vindicated.
But the conversation somehow returns to Europe. While Dunstone remains calm and measured he is clearly exasperated by the quality of the debate, which last week turned particularly acrimonious.
The Institute of Fiscal Studies had warned that Brexit could severely hit the economy and force two more years of austerity on Britain. The Vote Leave campaign accused the IFS of being a ‘paid-up propaganda arm’ of the EU.
‘It’s a bit juvenile that whenever anyone comes out with any kind of analysis on what might happen if we exit, they just pour scorn on it,’ says Dunstone. ‘These people – the Bank of England, the OECD, the IMF – they don’t just make it up.
‘And then to say the IFS is a sponsored mouthpiece of the European Commission is unbelievably insulting. It’s puerile.’
He goes on: ‘Someone said to me the other day: “I completely understand what you mean about the economy, but I am not voting out for the economy, I am doing it for sovereignty”.
‘But what does that mean? The person was about 70. Now it’s fine, if you’re retired, you have a pension, your mortgage is paid off, then you can afford the luxury of taking a gamble on sovereignty.
‘But if you are 25 years old and you hope to build your career and your prospects, it could be devastating.’
Perhaps what we are hearing is 25-year-old Dunstone setting up Carphone Warehouse in a flat.
People gave us credit for going on the front foot – and owning up to the problems
If you’re retired you can gamble on sovereignty ... but if you’re 25, it could be devastating