Vodafone had almost £11 billion wiped from its stock market value after the world's largest mobile phone company said that its results would suffer as the European telecoms sector was finally hit by the economic slowdown.

Shares in Vodafone fell 20p, or more than 13 per cent, to 129p after it said that it had trimmed its full-year revenue forecast to the bottom end of the £39.8 billion to £40.7 billion range given in May.

Arun Sarin, Vodafone's outgoing chief executive, admitted that the company had been hit by a “more challenging operating environment” in Europe. “There's a big macro- economic picture that's playing through, and frankly, as a company, we're not immune to it,” he said.

Yesterday's first-quarter results indicated a 0.2 per cent fall in like-for-like sales across Vodafone's European businesses.

In the UK, where voice revenues fell 4.4 per cent and overall revenue growth was flat at 2.1 per cent, Mr Sarin blamed weakened business on what he said was a very competitive market. The group lost 27,000 UK customers from its 18.5million base.

The Spanish market fared worst, with revenue, which had been up 5 per cent in the fourth quarter, falling by 2.5 per cent. Spain and the UK each account for about 13 per cent of Vodafone Group revenues. “The business isn't falling apart,” Mr Sarin said, “but within this business that's a segment that's having a hard time.”

The results spooked the stock market because telecoms is traditionally considered the most resilient sector and the last to be hit by a recession.

Jonathan Groocock, telecoms analyst for Investec, said that the results revealed “stark evidence from Spain of Vodafone's lack of defensiveness in a weakening economy”. He added: “These results shatter the widespread perception that Vodafone is immune in a slowdown.”

Vodafone's slump knocked confidence in the telecoms sector, with Carphone Warehouse shares falling about 6 per cent and BT down almost 4 per cent. It also dragged down shares in Telefónica, Vodafone's main rival in Spain, which fell almost 7 per cent.

The results are a disappointing end to Mr Sarin's five-year tenure, with analysts predicting more downgrades to come for the group.

The outgoing chief, who hands over to Vittorio Colao next week, is credited with moving Vodafone beyond its saturated core European market into the high-growth emerging markets, snapping up companies such as Hutchison Essar in India and Telsim in Turkey.

The buying spree has continued, with Vodafone acquiring a 70 per cent stake in Ghana Telecommunications for $900 million (£452 million) this month. Last month Verizon Wireless, the group's joint venture in the US with Verizon, agreed to buy Alltel for $28.1billion (£14.3billion), making it the largest mobile operator in the US.

Mr Sarin's emerging markets strategy, which has been fiercely criticised by some shareholders in the past, has helped to boost the group's overall revenue by 19 per cent this quarter.

However, some analysts question the long-term sustainability of Mr Sarin's legacy.

Vodafone is already seeing a slowdown in previously high-growth regions. Revenue growth in emerging markets and the Pacific region slackened from 12.6 per cent in the previous quarter to 9.2 per cent.

Vodafone's clientele in emerging markets is still growing, led by India, which added 5 million customers in the last quarter to reach nearly 50 million at the end of June. However, average revenue per user is down in Australia, Egypt, India and New Zealand.

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