RBC double-downgrades 'vulnerable' Vodafone

Vodafone and its dividend are "vulnerable", RBC Capital Markets said as it downgraded the telecoms giant's shares on Tuesday.

RBC cut its rating to 'underperform' from 'outperform' with the target price slashed to 125p from 260p.

While FTSE 100 group's "frenetic" restructuring of its portfolio has made the company "more European and converged, but also vulnerable".

Vodafone's underlying markets around Europe remain "challenging" and despite synergies and cost cutting from the restructuring, there is "very little financial headroom".

In November the board said it was reviewing the best strategic and financial direction for a newly created "virtual internal tower company", which could raise some cash from a sale.

Even given this, RBC said the group still "faces a threat from 5G spectrum".

In a final withering put-down, analyst William Fry said the dividend "is unsustainable even before we consider a macro downturn".