London-listed telecom stocks have been dragged down by fears over a US price war among mobile phone operators.

North American telco Verizon is to launch an unlimited calling plan for mobile phone users. Customers will be able to use their phones as much as they want for a flat rate of $99 per month.

AT&T and T-Mobile USA have followed suit and announced plans for similar unlimited packages.

The major US carriers haven’t traditionally offered unlimited minutes. The market is highly competitive and Verizon's initiative will no doubt prompt more telecoms operators to go down the same route.

Vodafone owns a 45% stake in Verizon. Its shares fell 3% to 164.8p on Wednesday morning as investors wondered whether the company will ever get a dividend and cash return for its stake.

Fears over price deflation in the telecoms sector also hit BT, which traded down 2% at 228.5p, and Cable & Wireless, down 1% at 166.6p.