Vodafone, the UK mobile phone giant, today warned that the deteriorating economic environment will leave full-year revenues at the bottom end of forecasts, despite posting a 19 per cent sales rise in the three months to June.

The company now expects revenues to reach the lower end of a £39.8 billion and £40.7 billion range, which it said reflected "first quarter performance, recent economic weakness and lower than expected equipment revenue". Shares in Vodafone fell 13.57 per cent to 129p at close.

However, Arun Sarin, Vodafone's chief executive who is due to step down this month, said today the mobile phone company's continuing focus on cost savings should allow it to achieve earlier profit forecasts between £11 billion and £11.5 billion.

He said: “Notwithstanding this more challenging operating environment, we continue to benefit from a diversity of assets and services, with strong revenue growth in EMAPA and another good quarter of data revenue growth offsetting weakness in Spain.

"Whilst we expect revenue around the bottom of the outlook range, our continued focus on cost reduction enables us to reiterate our operating profit and cash flow guidance for the year.”

Group revenues during the quarter rose 19 per cent higher at £9.8 billion.

Mr Sarin flagged up a good performance from Eastern Europe, the Middle East, Africa, Asia and the Pacific, with Romania, where Vodafoine has more than nine million customers, the main driver for growth in the region.

But the weakness in the Spanish economy and growing competition meant service revenues there were 2.5 per cent down.

Verizon Wireless, Vodafone's US associate, added 1.5 million customers. Verizon last month agreed to buy Alltel Corp, the fifth largest mobile operator in the US, for $28.1 billion.

Mr Sarin will be replaced by Vittorio Colao, deputy chief executive, this month and is expected to walk away with a £25 million "golden goodbye" although he will be staying on as a consultant on a “nominal” salary.

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