Turnover at the group in the six months to the end of September fell slightly to £16.8 billion, from £16.9 billion the previous year.

The mobile operator blamed the disposal of its Japanese fixed-line business and unfavourable exchange rate movements for the fall.

The company said that it had enjoyed organic growth, at constant exchange rates, of 6 per cent. It emphasised that its Japanese fixed-line business had contributed £818 million in the first half of last year alone. The business was sold in November last year Analysts, however, said that the group was suffering from an increasingly competitive marketplace, in which mobile operators are forced to be more aggressive to compete and to retain customers.

Like its peers, Vodafone has also suffered from an enforced cut in termination rates — the amount operators charge to take a call from another operator or from BT. Ofcom, the telecoms regulator introduced a cut of about 30 per cent on these rates this year.

To boost customer numbers, mobile phone operators have had to subsidise handsets and plough more money into marketing their services. In the UK, acquisition and retention costs as a proportion of turnover increased to 17 per cent from 13 per cent last year.

Earnings before interest, tax, depreciation and amortisation fell in the group’s key markets.

Trading in the Japanese market, where turnover fell from £4 billion to £3.7 billion was described by one analyst as “dire”.

Vodafone has suffered from strong competition in Japan from rival DoCoMo. DoCoMo has forged ahead far more quickly than Vodafone in areas such as third-generation services.

Mark James, at Nomura, the investment bank, said that the group’s results were “worrying”.

Julian Hearn, senior analyst at Ovum, the telecoms consultancy, said: “There is increased competition in the marketplace and because Vodafone is the biggest player it is being targeted by the new guys coming in who can be more nimble and more flexible than it.”

However, the operator has the scale and scope to beat off these players, he said.

The fall in sales overshadowed the group’s efforts to please shareholders by doubling its dividend payment and announcing an extension of its £3 billion share buyback scheme by about £1 billion in the year to next March.

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