Ignore Q3 trading, the departure of Dido Harding, and never mind the new hands on executive chairman role of founder Charles Dunstone, one of the first jobs facing incoming CEO Tristia Harrison will be to cut TalkTalk's (TALK) unaffordable dividend.
Don't just take my word for it, analysts at broker Jefferies believe the group's renewed subscriber growth push leaves even a flat dividend per share 'untenable post March 2017,' and other City number crunchers agree.
PAYOUT REALITY
UBS in December pointed out that massive improvements in free cash flow and slashing subscriber acquisition costs (SAC) are needed to fuel current payout projections beyond this year. Consensus currently anticipates a 25% lower dividend next year to 31 March 2018 than the 15.87p the company guides for this 12 months that implies a clearly unsustainable 9.5% yield.
Analysts at Haitong Research go as far as to predict a 40% cut to the payout next year, while investment bank Berenberg has previously suggested something similar.
WE WARNED ON DIVIDEND SIX MONTHS AGO
This would be no surprise to Shares, we predicted a big cut in the payout back in June last year. We also told investors to sell the shares at 247.6p, in spite of boardroom buying.
TalkTalk share price has collapsed since, today trading at 167.5p, and that's after Wednesday's somewhat puzzling 7% jump.
INCOMING CHAIRMAN TALKING STRAIGHT
More ominous still, even Dunstone appears to be laying the foundations of reduced expectations. On this morning's analyst call he apparently confirmed that EBITDA targets and dividend policy post-March 2017 are under review, with new strategy and targets to be outlined at the full year results in May.
Expect a payout rethink to 10p a year or less.
