Macquarie expects dividend cuts at Vodafone and Swisscom

Overall, their Alpha Model was "increasingly constructive" on the European Union telecoms space, they said in a research note dated published on Tuesday but dated 5 February.

In a nutshell, according to the analysts, outside of BT Group and Orange dividend growth rates in the sector were "overstated".

There also remained a long-term risk to consensus expectations for free cash flows, they said.

The main drivers of their investment thesis for the sector were: firms' difficulty in growing revenues due to a cocktail of negative factors including price competition, regulators, politicians, consumer behaviour, the shift towards 'bundles', continued string growth in consumer demand for speed and reliability and sustained high levels of capital expenditure.

In the same note, Macquarie reiterated its 'outperform' recommendations for shares of Orange and Telecom Italia.

The Australian broker also had BT Group (target price: 256p) and CityFibre at 'outperform' (target price: 49p) and Vodafone at 'underperform' (target price: 214p).