Cyberwarfare / Nation-State Attacks , Fraud Management & Cybercrime

Kyivstar Hack to Cost the Ukrainian Telco Giant $100 Million

Kyivstar Parent Veon Attributes Losses to Customer Retention Measures
Kyivstar Hack to Cost the Ukrainian Telco Giant $100 Million
Kyivstar headquarters in Kyiva, Ukraine, in a photo taken on April 23, 2021 (Image: Shutterstock)

A December cyberattack on Ukraine's top telecom operator, which authorities in Kyiv attribute to the Russian military, will cost the parent company nearly $100 million.

Netherlands-based Veon said Thursday the losses stem from steps taken to retain customers after hackers had knocked Ukrainian subsidiary Kyivstar offline, affecting internet access and mobile communications.

Ukraine's domestic security agency in mid-December accused the Russian General Staff Main Intelligence Directorate, better known as the GRU, of perpetuating the incident. A group calling itself Solntsepek took responsibility for the hacking. That name is a known front for the GRU hacking group popularly known as Sandworm (see: Ukraine Fingers Russian Military Hackers for Kyivstar Outage).

After restoring service, Kyivstar offered deals, including one month of free service, to some customers. Veon estimates the offers will deduct approximately $95 million from its 2024 balance sheet. The actual hacking incident should have no material financial impact in 2023 due to service disruption or costs "associated with additional IT capabilities required for restoring services, replacing lost equipment, or compensating external consultants and partners," it said.

The head of the Security Service of Ukraine's Cyber Security Department, Illia Vitiuk, earlier this month called the Kyivstar attack "disastrous" and a "big warning" for Ukraine and its allies.

The cyberattack temporarily disrupted Kyivstar network services including voice and data connectivity on mobile and fixed networks, international roaming and SMS services. The disruption affected air raid sirens, retail credit payments and ATM access to major banks in the country.

It is unclear how many subscribers Kyivstar lost due to the service disruptions. The New Voice of Ukraine reported in December that Kyivstar customers had scrambled to buy SIM cards from competitors Vodafone and Lifecell. Vodafone's number of new subscribers rose and its network load increased by 30% during that period.

Kyivstar is Ukraine's largest telecommunications operator, counting more than half of Ukraine's population as subscribers. It is also one of the largest private companies in the country, employing 3,500 people and generating $815 million in revenue in 2022.

About the Author

Mihir Bagwe

Mihir Bagwe

Principal Correspondent, Global News Desk, ISMG

Bagwe previously worked at CISO magazine, reporting the latest cybersecurity news and trends and interviewing cybersecurity subject matter experts.

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