Concerns that Vodafone could be the next telecommunications company to issue a profits warning increased yesterday after it emerged that the mobile phone group had contacted analysts to gauge latest forecasts.

Vodafone shares fell 7 per cent to 110p yesterday as speculation grew that the group was trying to to massage down market expectations ahead of half-year results next week. The market is especially jittery after BT's profit warning on Friday and a series of warnings from other telecoms groups in recent weeks. Vodafone said the calls were a routine procedure.

The group's shares have recently plumbed depths not seen since the aftermath of the dotcom crash in October 2002 as rival mobile operators reveal that they are starting to struggle in emerging regions.

Telenor, the largest Nordic telephone company, which takes about a third of its revenue from countries such as Bangladesh and Pakistan, has suffered a 33 per cent fall in third-quarter profits.

Millicom, the emerging markets specialist in Luxembourg, said that rising inflation had reduced its customers' disposable income.

Vodafone has about 120 million customers in emerging markets. Entry into these relatively untapped areas has helped its customer base to rise from 133 million in March 2004 to 260 million in March of this year.

While its business in India helped its emerging market division to increase by 22 per cent last year, other countries, including Egypt, Romania, Turkey and the Czech Republic, have experienced a slowdown. Some analysts think Vodafone's Turkish business could be badly hit as the country's economy becomes increasingly uncertain.

Nearly 80 per cent of Vodafone's revenue still comes from operations in developed markets but it counts on emerging markets for almost all of its growth.

Mark James, telecoms analyst at Collins Stewart, yesterday reiterated his sell stance, with a target of 90p. However, he gave warning that the price could fall to 75p should the group's emerging market figures disappoint. “We believe pricing pressure in developed markets could dent margins at the same time as expansion in emerging markets drags on cash flows,” he said.

Jonathan Groocock, telecoms analyst at Investec, who also has a sell recommendation, highlighted declining earnings in Europe and predicted further cuts when Vodafone reports its first-half results next Tuesday.

However, Robert Grindle, a Deutsche Bank analyst who has a buy stance with a target of 200p, said Vodafone's low share price was “at odds with the company's resilience in the face of recent price deflation, regulation and competition”.

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