Yell shares dived more than 20 per cent, putting the directories group on the brink of relegation from the FTSE-100 today, after it warned growth had slowed in the US hit by fierce competition.

The company today cautioned that the competitive environment in the US had intensified since its previous update in February as incumbent telephone companies with their own directories were fighting back against newcomers like Yell. It now expects organic revenues to be up 3 per cent for the year to March 31.

Last May the group said it was set to deliver 10 per cent organic growth for 2006-07, boosted by further internet growth and benefits from the $1.6 billion acquisition of TransWestern in 2005.

The company said expectations for its British and Spanish businesses remained unchanged and it remained on course to meet full-year expectations for the group.

John Condron, chief executive, said: "While the underlying share shift towards independent directories continues in the US, the pace of competition has increased as incumbents seek to protect their share and new books are published by both independents and incumbents. In the longer term, we believe this will lead to a shake-out in the market. In the near term, though, it will impact the rate of our US organic revenue growth."

Shares in the group were trading down 119p at 493.5p by 10.10am.

Analysts at Goldman Sachs downgraded its rating on the stock from "buy" to "neutral" and reduced its target price from 630p to 454p.

You can track Yell shares by clicking here.

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