Shares in telecom heavyweights Ericsson and Vodafone slumped Tuesday as restults did nothing alleviate fears over the impact of slowing consumer spending and investment needs.
The tough economic conditions forced FTSE-listed wireless company Vodafone to slash its revenue forecast as the prospects of a consumer slowdown dampened expectations for sales. Shares lost more than 14 percent following the numbers.
"The name of the game in European telecommunications, and mobile in particular, is cost control," Michael Kovacocy, European telecoms analyst at Daiwa Institute of Research Europe, said in a research note. Increased competition and saturated European markets dampened the prospects for the sector, he added.
Handset maker Ericsson's quarterly earnings came in better than expected, but shares still fell more than 9 percent as investors doubted the Swedish company's ability to contain costs.
"To really trigger a turnaround and a rally in the share price the operators, particularly in developed markets, need to start spending money on upgrading their data infrastructure," Richard Windsor, communications equipment analyst from Nomura, told "Squawk Box Europe," adding that Ericsson won't manage that this year.
- Reuters contributed to this report.