Dido Harding, the beleaguered chief executive of TalkTalk, is expected to scrap the company’s dividend as the broadband provider’s finances come under intense pressure in the wake of its crippling cyber attack, reports The Telegraph.
TalkTalk is facing major threats to its business as it battles the fallout from the security breach, which exposed the personal details of more than 150,000 customers.
Baroness Harding is expected to ditch dividend plans when the company reports interim results on Wednesday.
Analysts this weekend described TalkTalk’s financial position as potentially “precarious” if the payout to shareholders is made. The costs of the cyber attack are unknown and debt facilities are already stretched.
Steve Malcolm, of the independent equity research firm Arete, said that sticking to a promise to raise the dividend this year would mean borrowing an extra £350m, all to be paid to shareholders, implying no net cash flow.
He said: “After three years of borrowing heavily to pay its dividend, they would need to be very brave to recommend an interim dividend.”
Citi analysts also predicted there would be no payout.
Hackers broke into TalkTalk’s systems and trashed its image last month, with the company already threatened by BT and Sky on pricing.
The two giants have cut broadband prices just as TalkTalk has raised its own, threatening its role as the market’s value provider. Lady Harding has been attempting to stay on track to meet 2017 profitability targets that have long raised eyebrows in the City.
In its interim report, TalkTalk is expected to reveal it lost up to 60,000 customers in the first half compared with last year.
The net exodus will be set against quarterly gains of 82,000 for BT and 133,000 for Sky and is expected despite Lady Harding’s acquisition of up to 80,000 extra customers from Virgin Media and Tesco.