More on Vodafone. The mobile phone company is down 5.5p at 151.5p, knocking around 12 points off the leading index.
The damage is being done, as mentioned earlier, by a Morgan Stanley note. The bank's analysts are concerned that the European Union will act to curb mobile termination rates, which they say could cut Vodafone's European earnings by around 11% over the next three to four years.
"We regard mobile termination rates as a key driver of voice pricing and profitability for the large operators," said Morgan Stanley. "Vodafone remains heavily exposed (over 60% of equity value) to the European mobile market. Its operations tend to have high market shares. MTR regulation is likely to level the playing field with challenger operators in the field of voice pricing. This could hit Vodafone particularly hard in the
European sector."
The bank also warns that the company's SMS revenues could be hit by the increasing popularity of instant messaging and email.
