Shares in mobile phone operator Vodafone fell to their lowest level since February 1998 after the company cut its forecasts for its German and Italian businesses.
Vodafone, which owns Irish mobile phone company Eircell, released lower projected earnings at its German D2 unit and Italian Omnitel business that were well below analysts' expectations, sending its shares 7 per cent lower and dragging European telecoms shares down.
Vodafone projected EBITDA (earnings before interest, tax, depreciation and amortisation) of €5.995 billion for D2 and Omnitel in 2002/03 is down 5.2 per cent on a figure it published last July.
Vodafone also forecast €6.731 billion EBITDA for D2/Omnitel in 2003/04, down 8 per cent on the previous estimate.
"Nothing in this announcement should be interpreted as a revision of the company's views of the current trading position or future prospects of the company," Vodafone said.
But the market is concerned at the way the forecasts appeared buried among news restating the firm's intention to buy out the outstanding minority shareholders in Vodafone. Vodafone's shares went in a spin and fell below the key 100 pence mark.
Investor concerns about slowing growth and the heavy cost and uncertainty of new mobile phone technologies have sent telecoms shares plunging over 70 per cent since March 2000, forcing groups to rein in capital spending.
Dealers said Vodafone was also under pressure due to rumours of a downgrade by investment bank Goldman Sachs and after the US Nasdaq index slid overnight. Goldman Sachs said it had not changed its rating or estimates but were looking closely at the statement.