Struggling broadband and calls supplier TalkTalk (TALK) could be forced to slash its dividend by up to 40% according to some analysts. Global equities house Haitong Research is the latest to join a growing chorus of opinion sceptical about the group's promises on future performance.

Falling subscriber numbers, rising wholesale costs and savage competition form the backbone of a lengthening list of perceived threats facing TalkTalk. But Haitong analysis also flags up years of repeat 'exceptional' costs that are proving to be anything but one-offs.

'We think debate about TalkTalk’s opex (operating expenditure) trends is of little value because these exclude big, recurring restructuring costs,' claims Haitong telecoms analyst John Karidis. 'These averaged at between circa 15% and 34% of headline EBITDA (earnings before interest, tax, depreciation and amortisation) and profit before tax in each of the last nine years.'

The group's operating performance has been a subject of hot debate for more than a year and Shares has repeatedly reported on the rising 'wall of worry' that investors are being asked to scale. Last summer (see Shares, 13 Aug 2015) we explained why TalkTalk's EBITDA margin targets of 25% by the end of the current year to 31 March 2017 looked doomed to failure. The forecast mean of analyst estimates is currently for 17.5%.

In October 2015 the group suffered another serious blow when it was targeted by cyber attackers, with more than 150,000 customers thought to have had their personal information breached. That led to the group losing nearly 100,000 of those accounts as consumers lost faith in the business.

If Haitong's analysis proves correct, and the group cuts the shareholder payout by 40%, it would imply that the share price, currently trading at 247.6p, would need to fall by around 100p to maintain current levels of implied yield support of 6.1%, or a target price of about 150p. The shares have already lost around 40% in the past year.

Threats to the group's current valuation are coming from all sides and we maintain our long-held negative view.