Vodafone shares yesterday slipped briefly below the critical 220p sterling at which Eircom can withdraw from the deal to sell Eircell to the UK mobile phone firm. The shares closed at 220p sterling, down 7 3/4p.

In nervous early trading, Vodafone shares dropped to 219 3/4p sterling as the market was rattled by weaker-than-expected sales data from Finnish mobile phone maker Nokia.

The figures caused a 13 per cent slide in Nokia's share price in Helsinki, triggered fears about Motorola's figures which are due in the US today and increased concern in already jittery markets about the telecoms, media and technology sector.

By midday, the FTSE 100 was down 70.8 points at 6,078.8, just six points above the morning low. Vodafone accounted for about one-third of the early market fall.

On Monday, Vodafone shares had fallen 14 1/2p to 227 3/4p when one of its largest shareholders the Hong Kong conglomerate Hutchison Whampoa said it would sell half its stake in the group.

Under the terms of the Eircell sale, Eircom can exit the deal if the price of Vodafone shares falls to 220p sterling or below. Asked what Eircom intended to do now, a spokesman declined to comment. Market sources said that, while Eircom at present had the right to walk away, it was unlikely to make any move until closer to the extraordinary general meeting to put the deal to shareholders. That meeting is scheduled for late March.

"Eircom is not going to monitor the price every day. What will be important is the trend to March. At 220p, there would be pressure on the Eircom board to reassess the offer and on Vodafone to increase it," according to ABN Amro telecoms analyst Ms Jemma Houlihan.

A 220p sterling Vodafone price values the Eircell deal at #1.57 as against about #1.84 when the deal was announced. The value of the deal for Eircom shareholders is falling both because of the drop in the Vodafone price and because of the euro's rise against sterling.

While the Vodafone and other telecoms shares are expected to remain volatile over coming weeks on nervous equity markets, the Eircom board will have to assess what, if any, alternatives are available to the deal. But at 220p sterling and with the euro rising against sterling, the board would come under pressure to seek better terms from the UK company.

Eircom shares closed two cents stronger yesterday at #2.51.