Thursday newspaper share tips: Disconnecting from TalkTalk

The TalkTalk hacking combined with a price war against its rivals has led The Telegraph’s Questor to rat the shares at ‘sell’.

The column noted in the last six months, shares have halved and believes the worst is yet to come as the company looks weak.

It said the telco grew when it separated from Carphone Warehouse in 2010 as competitors BT and Sky didn’t think it was a threat.

With faster and cheaper broadcast, TV available across a myriad of devices, and the slow death of the landline, customers now want everything but for cheaper than ever before.

However Questor said the company isn’t well positioned in all those areas.

“It lacks the scale to dominate on price and doesn’t have the infrastructure base to control access.”

It also noted a big risk around its TV offering.

Despite the company giving away set-top boxes, the number of people joining the service has slowed and there has been a small increase in the number of people cancelling.

“In an environment that was already proving difficult, the cyber attack could have been the tipping point for customers who are already wavering on their choice of provider.”

With the company financing dividends through debt, Questor highlighted that net debt is expected to surge from £90m to £680m by the end of March, which is why prospective dividends don’t look good.

In The Times, Tempus burrowed through Hays’ results out yesterday.

The FTSE 250 recruitment group reported a rise in second quarter net fees thanks to solid demand in Continental Europe.

The company said underlying net fees rose 7% in the quarter to the end of December.

This marked the 11th consecutive quarter of year-on-year growth as “excellent” growth of 16% in Continental Europe and Rest of World helped to offset just 1% growth in the UK and Ireland.

In the UK and Ireland, the public sector was down 2% as markets became tougher as the quarter progressed, while the private sector was up 3%.

Hays said the significant headcount investment it made earlier in 2015 drove a further acceleration of growth to 14% in Germany, its second-largest business, and elsewhere in Europe, with seven countries including France delivering record performances.

Tempus said the results from Hays show that its parts are moving in different directions, in contrast with other upturns which are “more symmetrical”.

“The cause here is the oil price and China, I suspect, plus drag from the strength of sterling against the euro and other currencies.

“Hays has echoed Robert Walters and Michael Page International in recording a definite slowdown in confidence in the UK as the year neared its close. Time will tell if this is a genuine trend.”

Given the uncertainties, Tempus rated the shares at ‘avoid for now’ despite the prospect of special dividends and the shares coming back a long way.