TALK.L Share News (TALK)

(ShareCast News) - Talk Talk´s strategy of raising prices on a shrinking customer base was a poor proposition, even more so with growth in the overall market flat, analysts at Redburn said.Together with increased competition from the likes of Virgin Project Lightning and Vodafone, the prospects for the company were particularly grim, Nick Delfas said in a research report sent to clients.Indeed, Delfas expected the company´s debt covenants to come increasingly into focus.Potential merger partners were also likely to wait for signs of greater sustainability in Talk Talk´s subscriber base, robbing the shares' valuation of the support provided by the chance of a potential tie-up."As the business shrinks and debt rises, debt covenants will come into greater focus," he added.Nonetheless, "the necessity to combine with either O2 or Three is clear, but unfortunately for TalkTalk equity and bondholders, it is increasingly apparent that merger partners can wait this dance out for a little longer," Delfas said.The Redburn analyst cut his recommendation on the shares from 'neutral' to 'sell' while slashing his estimate of 'fair value' from 150p to 100p.Delfas also no longer expected Talk Talk to pay a dividend in fiscal years 2018 and 2019.