Mobile phone group Vodafone cut its revenue outlook, as tougher economic conditions forced consumers to hold back from buying and using new handsets, especially in Spain, knocking its shares to a 20-month low.

The move sent shares in the world's largest mobile phone company by revenue down almost 13 per cent yesterday, cast a shadow over outgoing chief executive officer Arun Sarin's last set of results and hit the European telecoms sector.

"This shatters the widespread perception that Vodafone will be defensive in a weakening economy," Investec analyst Jonathan Groocock said. "This is going to trigger a de-rating and I'm going to be moving towards more defensive stocks."